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What is Market Size, TAM, SAM, and TM?

Updated: Dec 7, 2023


Market Size

Market size refers to the total potential revenue for a particular product or service within a specific geographic region or industry. It represents the overall demand for a particular offering, encompassing all potential customers(or)Market size refers to the total sales value or total potential sales of a specific product or service within a particular market.


Total Addressable Market (TAM)

TAM represents the overall revenue opportunity that is available for a specific product or service within the entire market. It is the total demand for a product or service if there were no constraints or limitations.


Serviceable Addressable Market (SAM)

SAM is a subset of the TAM and represents the portion of the market that a company can realistically target based on factors such as geography, industry, or customer type.

SAM is a more realistic representation of the market a company can realistically reach and serve.


Target Market (TM)

TM is the specific group of customers that a company aims to reach with its products or services. The target market is the specific segment of the SAM that a company intends to focus its marketing and sales efforts on. It represents the ideal customer profile, considering factors such as age, income, location, preferences, and needs.


Exploring TAM, SAM, TM Through Five Startups:


1. Edutech Startup - BYJU'S


TAM: The Indian edutech market is estimated to reach $10.4 billion by 2025.

SAM: Students from kindergarten to grade 12 seeking online learning solutions.

TM: Middle-class families in Tier 1 and Tier 2 cities seeking personalized and interactive learning experiences for their children.


2. Logistic Startup - Delhivery


TAM: The Indian logistics market is estimated to reach $330 billion by 2025.

SAM: E-commerce businesses, retail stores, and manufacturers requiring efficient and cost-effective supply chain solutions.

TM: Companies seeking on-demand, pan-India delivery services with real-time tracking and visibility.


3. Fintech Startup - Paytm


TAM: The Indian digital payments market is estimated to reach $14.5 billion by 2025.

SAM: Mobile and internet users making online and offline payments.

TM: Individuals, businesses, and merchants seeking convenient, secure, and cashless payment options.


4. Social Media Startup - ShareChat


TAM: The Indian social media and vernacular content market is estimated to reach US$160 billion by 2025.

SAM: Indian users seeking a social media platform in their native language.

TM: Non-English speaking individuals in Tier 2 and Tier 3 cities seeking a platform for social connection, entertainment, and local news.


5. Consumer Startup - boAt


TAM: The Indian consumer electronics market is estimated to reach $21.18 billion by 2025.

SAM: Tech-savvy consumers seeking affordable and stylish audio devices.

TM: Young adults and millennials seeking high-quality, value-for-money wireless earbuds and headphones.


Conclusion:

Understanding TAM, SAM, and TM is crucial for startups to navigate and carve their niche in the market. By analyzing these concepts through the lens of diverse startups, we see how these principles guide strategic decisions and market positioning. As startups embark on their journey, a clear understanding of TAM, SAM, and TM becomes a compass, steering them towards success in the ever-evolving business landscape.

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