Glossary Term
Serviceable Addressable Market (SAM)
Definition
Serviceable Addressable Market (SAM) refers to the portion of the Total Addressable Market (TAM) that a company can target with its products or services, given its specific business model, geographic reach, and capabilities. SAM represents the subset of the market that a company can realistically serve with its current resources, technology, and operational constraints. It is narrower than TAM, which encompasses the entire market, and it helps businesses focus on achievable opportunities.
Relevance to the MedTech Industry
SAM identifies the market segment that a business can effectively target and capture, based on its current capabilities, distribution channels, and product offerings. Understanding SAM helps companies focus their marketing efforts, allocate resources efficiently, and set achievable growth targets. In the medical device industry, SAM could include specific regions, healthcare sectors, or types of medical conditions that a company’s products can address, helping companies prioritize their go-to-market strategy.
Additional Information & Related Terms
Relationship with TAM and SOM
Total Addressable Market (TAM):TAM represents the total revenue opportunity available for a product or service if it were to achieve 100% market share in its entire market. It is the broadest measurement, encompassing all potential customers globally or within a specific market segment.
Example: For a medical device company, the TAM for surgical tools could include the global market for all surgical instruments across various specialties and healthcare systems.
Serviceable Addressable Market (SAM):SAM is a subset of TAM that narrows the focus to those customers the company can realistically target based on factors such as geography, regulatory constraints, and product capabilities. It accounts for the market size the business can actually serve.
Example: A medical device company may define its SAM for surgical tools as the market for orthopedic surgical instruments within North America, which is a realistic target based on its distribution channels and market reach.
Serviceable Obtainable Market (SOM):SOM represents the portion of SAM that a company can realistically capture in the near term, considering competition, current resources, and market entry barriers. SOM is the target market within SAM that the business aims to acquire within a specific time frame.
Example: In the same example of a medical device company, SOM could be defined as the market share of orthopedic surgical tools the company expects to capture within the first 12 months, considering competitive dynamics and brand awareness.
Related Terms
Total Addressable Market (TAM): The total market demand for a product or service, assuming the company achieves 100% market share.
Serviceable Obtainable Market (SOM): The portion of SAM that a company can realistically capture, given competition and available resources.
Market Segmentation: The process of dividing a broad target market into smaller, more manageable sub-markets based on specific characteristics like geography, customer needs, or behaviors.
Market Penetration: The degree to which a product or service has captured its target market, often measured as a percentage of SOM.
Customer Acquisition Strategy: A plan focused on attracting and converting leads within the company’s SAM, which directly influences the growth of SOM.