Illustrating market size and potential is critical in business strategy and pitch decks. The Total Addressable Market (TAM), Serviceable Available Market (SAM), and Serviceable Obtainable Market (SOM) are essential metrics. Using visual techniques to compare TAM, SOM, and SAM makes these complex concepts more digestible and compelling.
Let’s explore various visual techniques to enhance your presentation and ensure your audience grasps the significance of market segments.
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Defining TAM, SAM, and SOM
Before diving into the visual techniques, let’s define these terms:
Total Addressable Market
The total demand for a product or service, assuming unlimited resources and no competition. It represents the largest potential market size.
Serviceable Available Market
The portion of the TAM that your product or service can serve, considering geographical, regulatory, and operational constraints.
Serviceable Obtainable Market
The realistic market size you can capture, considering competition, market penetration, and marketing efforts.
Pie Charts
Pie charts are a straightforward way to illustrate the proportions of TAM, SAM, and SOM. By representing each segment as a slice of a pie, you can quickly show how these markets relate to one another.
- TAM — A full circle, representing 100% of the potential market.
- SAM — A slice within the TAM circle, showing the portion of the market you can realistically target.
- SOM — A smaller slice within the SAM, indicating the market share you can obtain.
Pie charts are effective because they provide a clear visual hierarchy, making it easy to understand the relative sizes of each market segment at a glance.
Venn Diagrams
Venn diagrams use overlapping circles to represent different sets, showcasing relationships and intersections.
- TAM — A large circle encompassing all potential customers.
- SAM — A smaller circle within TAM, showing your reachable market.
- SOM — An even smaller circle within SAM, highlighting the portion you can capture.
Venn Diagrams illustrate constraints and overlaps, visually showing how your market focus narrows from TAM to SOM.
Funnel Charts
Funnel charts depict the progressive narrowing of market segments from TAM to SOM. They visualize the decreasing size of each segment as you move down the funnel.
- Top of the Funnel — Represents TAM, the broadest market.
- Middle of the Funnel — Represents SAM, narrowing down the feasible market.
- Bottom of the Funnel — Represents SOM, the most targeted market.
Funnel charts are excellent for demonstrating the filtering process and emphasizing the focused nature of your market strategy.
Bar Charts
Bar charts use vertical or horizontal bars to visually compare the magnitudes of TAM, SAM, and SOM.
- TAM — The tallest bar, representing the largest potential market.
- SAM — A shorter bar next to TAM, indicating a reduced market size.
- SOM — The shortest bar, showing the obtainable market share.
Bar charts allow for easy side-by-side comparison and can be particularly effective when combined with numerical data.
Stacked Area Charts
Stacked area charts offer a dynamic way to visualize the relationship between TAM, SAM, and SOM over time. They are useful in showing how these market segments evolve or project future trends.
- TAM — The entire area under the curve.
- SAM — A shaded area within TAM, representing the serviceable market.
- SOM — A smaller shaded area within SAM, indicating the obtainable market.
Stacked area charts provide a comprehensive view of market dynamics, highlighting changes and growth patterns over time.
Choosing the Right Visual Technique
Selecting the appropriate visual technique depends on the context of your presentation and the message you want to convey. Here are some tips for choosing the right method:
Simplicity
For straightforward comparisons, pie charts and bar charts are often the best choices.
Relationships
If you need to illustrate relationships and overlaps, Venn diagrams and funnel charts are ideal.
Trends
To show changes over time, stacked area charts provide a dynamic and informative view.
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Using visual techniques to compare TAM, SAM, and SOM can provide a clear and impactful view of market potential to drive informed decision-making and strategic planning.
