Serviceable Obtainable Market

Serviceable Obtainable Market

Definition

Serviceable Obtainable Market (SOM) refers to the portion of the Serviceable Available Market (SAM) that a business can realistically capture based on its resources, capabilities, and market positioning.

Description

Serviceable Obtainable Market (SOM) is a subset of the Serviceable Available Market (SAM). It represents the portion of the SAM that a business can realistically capture based on its resources, capabilities, and market positioning. It is an essential metric for businesses as it helps them understand the market size they can realistically capture and plan their business strategies.

TAM, SAM, SOM

It is determined by several factors, such as the size of the market segment, the level of competition, the pricing strategy, the marketing and distribution channels, and the brand strength. Businesses must assess these factors to determine the potential market size they can realistically capture and focus their resources and efforts.To calculate SOM, businesses must first determine their SAM by identifying the total addressable market size, excluding any market segments outside the scope of their business capabilities, such as geographic regions where they cannot feasibly operate or customers who do not match their target demographic. 

Once the SAM has been determined, businesses must assess the level of competition and their own resources and capabilities to estimate the portion of the SAM that they can realistically capture. This involves analysing market trends, customer data, and feedback and evaluating the company’s strengths and weaknesses relative to its competitors.Once the SOM has been determined, businesses can plan their marketing, sales, and distribution strategies to capture their market share. By focusing on it, businesses can optimise their resources and efforts to generate maximum revenue and profitability while minimising the risk of overextending themselves in the market. 

Regularly reviewing and updating SOM estimates helps businesses adjust their strategies based on changing market conditions and customer preferences, ensuring continued growth and success.

Importance of Serviceable Obtainable Market(SOM)

Serviceable Obtainable Market (SOM) is an important metric for businesses. 

 

  • It helps them determine the portion of the Serviceable Available Market (SAM) they can realistically capture based on their resources, capabilities, and market positioning. 
  • By focusing on the SOM, businesses can optimise their resources and efforts to generate maximum revenue and profitability while minimising the risk of overextending themselves in the market.
  • It helps businesses tailor their product or service offerings, pricing strategies, and marketing messages to meet their target customers’ specific needs and preferences. It also helps businesses identify and prioritise the most profitable market segments, allowing them to focus their resources on those areas with the highest potential return on investment.
  • Reviewing and updating SOM estimates helps businesses adjust their strategies based on changing market conditions and customer preferences, ensuring continued growth and success. 
  • By understanding and serving their SOM, businesses can build a loyal customer base, improve their brand reputation, and establish a strong market presence, leading to long-term success and sustainability.

How to serve the Serviceable Obtainable Market (SOM)?

To serve the Serviceable Obtainable Market (SOM), businesses must first determine the size of their SOM by assessing their resources, capabilities, and market positioning relative to their competitors. Once it has been determined, businesses can plan their marketing, sales, and distribution strategies to capture their market share.

Here are some ways businesses can serve their SOM:

  1. Develop a strong value proposition: Businesses must develop a value proposition that resonates with their target customers, highlighting the unique benefits and features of their products or services that differentiate them from competitors.
  2. Tailor product offerings: Businesses must tailor their product or service offerings to meet their target customers’ specific needs and preferences. This involves understanding their pain points, preferences, and behaviours and developing products and services that address those needs.
  3. Optimise pricing strategies: Businesses must optimise their pricing strategies to capture market share while maintaining profitability. This involves analysing market trends, customer behaviour, and competitive pricing to determine the most effective pricing strategy.
  4. Utilise targeted marketing and advertising: Businesses must utilise targeted marketing and advertising campaigns to reach their target customers effectively. This involves identifying the most effective channels, messaging, and tactics to effectively reach their target audience and communicate their value proposition.
  5. Establish effective distribution channels: Businesses must establish effective channels to ensure their products or services reach their target customers efficiently. This involves identifying the most effective channels, such as online marketplaces, brick-and-mortar stores, or direct-to-consumer sales, based on their target customer’s preferences.

Future aspects of Serviceable Obtainable Market(SOM)

The future of the Serviceable Obtainable Market (SOM) will likely be shaped by several factors, including technological advances, changing consumer behaviours, and global economic trends. Here are some possible future aspects of SOM:

 

  1. Digitalization: The increasing adoption of digital technologies will likely change how businesses serve their SOM. Digital channels such as e-commerce, social media, and mobile apps will become more important for businesses to reach their target customers.
  2. Personalization: As consumer preferences become more diverse and individualised, businesses must focus on personalization to serve their SOM effectively. This involves tailoring products, services, and marketing messages to meet each customer’s specific needs and preferences.
  3. Sustainability: With growing concerns over climate change and environmental degradation, businesses must prioritise sustainability to serve their SOM effectively. This involves developing eco-friendly products and services and implementing sustainable business practices to appeal to environmentally conscious consumers.
  4. Globalisation: The increasing globalisation of markets will likely expand the SOM for many businesses. As companies expand their reach beyond their home markets, they will need to adapt their strategies to meet the needs and preferences of customers in different regions and cultures.
  5. Shifts in demographics: Changes in demographics, such as ageing populations and increasing diversity, will also impact the SOM. Businesses must adapt their strategies to appeal to different age groups, ethnicities, and cultural backgrounds to effectively serve their SOM.

Example

Apple’s SOM includes consumers interested in premium, high-quality electronics and software products and willing to pay a premium price for these products.

Apple tailors its product offerings to meet the specific needs and preferences of this SOM by emphasising design, functionality, and ease of use. They utilise targeted marketing and advertising campaigns to reach their target customers effectively, such as their “Think Different” campaign. Apple also established effective distribution channels to ensure their products get their target customers efficiently, such as their brick-and-mortar stores and online marketplaces.

By focusing on its SOM, Apple has been able to establish a strong market presence and build a loyal customer base. They consistently rank highly in customer satisfaction surveys and have a reputation for innovative, high-quality products.

FAQ

 

What is a Serviceable Obtainable Market (SOM)

A Serviceable Obtainable Market (SOM) refers to the portion of the total addressable market that a company can realistically serve and capture based on factors such as the company’s resources, capabilities, and competitive landscape.

How is SOM different from TAM and SAM

Total Addressable Market (TAM) refers to the entire market demand for a particular product or service, while Serviceable Available Market (SAM) refers to the portion of TAM that a company can realistically serve. On the other hand, SOM refers to the portion of SAM that a company can capture based on its resources and capabilities.

Why is SOM important for businesses

It is important for businesses because it helps them to focus their efforts and resources on the most profitable market segments. By identifying their SOM, businesses can tailor their product offerings, marketing strategies, and distribution channels to better serve their target customers and increase their chances of success.

How can businesses identify their SOM

Businesses can identify it by analysing their resources, capabilities, competitive landscape, and market demand. They can also conduct market research to understand customer needs, preferences, and behaviours.

What are some strategies for serving the SOM effectively

Some strategies for serving the SOM effectively include tailoring product offerings to meet specific customer needs and preferences, utilising targeted marketing and advertising campaigns, establishing effective distribution channels, and providing exceptional customer service.

How can businesses adapt to changes in the SOM

Businesses can adapt to changes in the SOM by remaining flexible and responsive to shifts in consumer preferences, economic trends, and technological advancements. This may involve modifying product offerings, adjusting marketing strategies, or expanding into new markets.

 

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