Total Addressable Market
Total addressable market (TAM) is the total size of a market for a product, service or firm. This is the total theoretical revenue a firm could capture on a global basis if it had perfect distribution capabilities and no competitors. This is often viewed as a vanity metric as this produces a very large number that doesn't necessarily correlate well to the revenue potential of a firm.A small local restaurant could theoretically become a chain and compete in all restaurant markets on a global basis. As such, its total addressable market is the global food service market, currently estimated at around 3 trillion US.
Serviceable Available Market
Serviceable available market (SAM) is the total market size that a firm can actually reach with its distribution capabilities. For internet firms, this can be very large and similar to TAM. For firms that require physical locations and distribution, this tends to be much smaller and more relevant than TAM.A local restaurant in a business district could theoretically capture every breakfast, lunch, dinner and catering contract in that area. The value of this may be several million dollars a month.
Serviceable Obtainable Market
A service obtainable market (SOM) is the percentage of SAM that can be realistically achieved. This means that you can reach the customer and have a good chance of selling to them.A local restaurant has a limited number of seats and a limited capacity kitchen. As such, at most it could expect to be at capacity during meal rushes such as the lunch rush. It could not expect to be at capacity at all times, as this is unrealistic. As such it bases its service obtainable market on estimates of how much revenue it would produce if it were at capacity during the peak local restaurant demand hours in a year.
Expanded Markets
Very large firms may define themselves using concepts that are larger than industries or sectors in order to create large TAMs. This may be done to convince investors that growth is still possible despite high market share. It may also be done to downplay a monopoly position by defining the firm in terms of a gigantic market that it doesn't completely control. A national telecom with a monopoly in a particular nation that describes itself as a global communications and media company. This implies room for growth as the firm theoretically competes in large global markets such as technology services, entertainment, news and digital media.
