Serviceable Obtainable Market

Definition

Serviceable obtainable market (SOM) refers to the portion of the market that a business can realistically capture, considering factors such as competition, market conditions, and the company's resources. This term is crucial in competitive intelligence and market opportunity analysis, as it helps businesses assess their potential in a specific market segment. By identifying the SOM, companies can strategically focus their marketing efforts and allocate resources more effectively to maximize their growth potential.

5 Must Know Facts For Your Next Test

1. SOM is often calculated after determining the Total Addressable Market (TAM) and Serviceable Available Market (SAM), allowing companies to refine their focus.
2. Understanding SOM helps businesses set realistic sales targets and develop effective marketing strategies tailored to specific segments.
3. SOM can vary significantly based on geographic location, target demographic, and changes in market dynamics over time.
4. Effective competitive intelligence can reveal insights about competitors' market shares, helping companies estimate their own SOM more accurately.
5. Businesses often use SOM in financial projections and budgeting to ensure they align their goals with achievable market realities.

Review Questions

• How does understanding the serviceable obtainable market impact a business's strategic planning?
  • Understanding the serviceable obtainable market is essential for strategic planning as it enables businesses to identify realistic growth opportunities within a specific market segment. By knowing the SOM, companies can focus their resources on capturing that market share while setting achievable sales targets. This information allows businesses to tailor their marketing strategies effectively, ensuring that efforts are directed toward segments where they have a higher likelihood of success.
• Discuss the relationship between serviceable obtainable market and competitive analysis in identifying market opportunities.
  • The serviceable obtainable market is closely linked to competitive analysis as it provides insights into how much of the market a business can realistically capture against its competitors. By evaluating competitors' strengths and weaknesses, a company can better understand its position within the market and identify niches or gaps that can be targeted. This relationship helps businesses refine their SOM estimations and create more focused strategies to compete effectively.
• Evaluate how changes in consumer behavior might influence a company's serviceable obtainable market over time.
  • Changes in consumer behavior can significantly influence a company's serviceable obtainable market by altering demand patterns, preferences, and purchasing habits. For example, if consumers shift toward sustainable products, companies that adapt their offerings accordingly may expand their SOM by attracting environmentally conscious buyers. On the other hand, if competitors respond more quickly to these changes, they could capture a larger share of the SOM. This dynamic nature means that companies must continuously monitor consumer trends and adjust their strategies to maximize their reachable market potential.

Related terms

Total Addressable Market: The total addressable market (TAM) is the overall revenue opportunity available for a product or service if it were to achieve 100% market share.

Market Penetration: Market penetration is the percentage of the target market that a company has reached with its product or service, indicating how much of the SOM has been captured.

Competitive Analysis: Competitive analysis involves evaluating competitors in a market to understand their strengths, weaknesses, and strategies, which helps businesses identify their own SOM.