Glossary Term
Serviceable Obtainable Market (SOM)
Definition
Serviceable Obtainable Market (SOM) refers to the portion of the Serviceable Addressable Market (SAM) that a company can realistically capture in a specific time frame, based on its resources, competitive landscape, and market conditions. SOM represents the target market share within the SAM that the company can actively pursue and convert into customers. It is a more refined subset of SAM, taking into account the company's ability to compete and grow within a defined market.
Relevance to the MedTech Industry
SOM defines the attainable market share that a business can capture, considering current constraints such as resources, competition, and operational capacity. Unlike the broader TAM or SAM, SOM is focused on what is achievable in the short-to-medium term. For businesses, SOM helps set realistic sales goals, marketing strategies, and growth targets, ensuring that efforts are directed toward a market segment that can be effectively targeted and converted.
Additional Information & Related Terms
Key Components of SOM
Market Competitiveness:SOM takes into account the level of competition within the SAM. If there are many established players in a market, the SOM will likely be smaller unless the company can differentiate itself through innovation or superior value propositions.
Example: A medtech startup entering the highly competitive diagnostic equipment market might only target smaller clinics or regions with fewer competitors as part of its SOM.
Sales Capacity and Resources:The company’s ability to scale its sales efforts and support customers is a crucial factor in determining its SOM. Businesses need to assess their sales team's capacity, marketing efforts, and distribution channels to estimate the market share they can realistically capture.
Example: A biotech company may target academic institutions and research labs in its SOM, focusing on customers that align with its sales team’s capabilities and the company's distribution network.
Customer Acquisition Strategy:A successful customer acquisition strategy is key to capturing SOM. Companies need to focus on the most profitable and accessible customer segments within SAM and develop targeted marketing strategies to convert those prospects into customers.
Example: A software provider focusing on hospitals in a particular region may develop targeted digital campaigns to reach decision-makers in those hospitals, tailoring the offering to meet their specific needs.
Market Entry Barriers:The SOM can be constrained by various entry barriers, such as regulatory approvals, technological limitations, or customer adoption challenges. These barriers may reduce the percentage of SAM that a company can effectively target and capture.
Example: A medical device manufacturer may need to navigate regulatory hurdles or demonstrate clinical efficacy before expanding its SOM to include more healthcare providers.
Related Terms
Total Addressable Market (TAM): The total market demand for a product or service, representing the highest potential market size.
Serviceable Addressable Market (SAM): The portion of TAM that a company can target with its products or services, considering its business model and capabilities.
Market Penetration: The extent to which a product or service has captured the target market, influencing the definition of SOM.
Customer Acquisition Cost (CAC): The cost incurred to acquire a new customer, which can influence how much of the SOM a company can effectively capture.
Market Share: The percentage of the total market (SOM) that a company successfully captures over a specific period.