Market Sizing Approach

Question

Accepted Answer

Market sizing approach involves identifying the total addressable market (TAM), the served available market (SAM), and the target market.

Identify the total addressable market (TAM) by determining the potential market size for a product or service.
Calculate the served available market (SAM) by estimating the portion of the TAM that your company can realistically target.
Define the target market by narrowing down the SAM to the specific segment of customers that your company aims to reach.
Use various methods such as top-down approach, bottom-up approach, and value-based approach to estimate market size.
Consider factors like demographics, market trends, competition, and customer behavior when determining market size.
Example: If you are analyzing the market size for a new fitness app, you would calculate the TAM by looking at the total number of smartphone users interested in fitness.
Example: The SAM would be the subset of smartphone users who are willing to pay for a fitness app.
Example: The target market would be the specific demographic (e.g. young adults aged 18-35) that your app is designed for.

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