Market Potential | Understand Your Business's Probable Revenue Generation Potential

At Vibz, one of the most powerful features is the analysis of your business's market potential. This analysis is performed using the metrics Total Addressable Market (TAM), Serviceable Available Market (SAM), and Serviceable Obtainable Market (SOM). Let's understand how each of them works and how you can use them to plan your business's growth. 

Total Addressable Market (TAM)

TAM represents the total size of the market for your product or service. It's the starting point for understanding market potential. In Vibz, you begin by defining the total market by providing three main values: 

1. Total Population: How many people are in the market you intend to reach? If your business is local, estimate how many people live in the service area.

2. % of Potential Customers: What percentage of the total population could be interested in your products or services, without restrictions? This is an estimate of how many people, in theory, would buy from you.

3. Annual Spending: How much are these people willing to spend annually on your type of product or service?

With this information, Vibz calculates a hypothetical total revenue for the total market, showing the maximum value your market can reach. This value is usually very high, as it covers all companies and consumers who could potentially acquire the product or service. It's useful for understanding the overall scale of the market but doesn't reflect the portion a single company can realistically achieve.

Serviceable Available Market (SAM)

After understanding the total market, the next step is to focus on the serviceable available market. This is a segment that represents the market you can effectively serve with your current resources and capacity. In Vibz, to define the serviceable available market, you provide:

• % of Customers Who Are Your Target Audience: Within the universe of potential customers in the Total Market, provide the percentage of customers who meet the specific characteristics of your target audience. Also, consider the percentage you can actually reach, taking into account geographical and distribution limitations.

The total revenue for the Serviceable Available Market is then recalculated based on this target audience, offering a more realistic view of what your business can achieve. 

Serviceable Obtainable Market (SOM)

This represents the segment of the market you genuinely expect to capture in the near future. It takes into account competition and your ability to acquire and retain customers. In Vibz, you define SOM by providing:

• % of Your Market Share: This value reflects your market share. That is, what is your share of participation within the serviceable available market. Consider factors such as competition, sales and marketing capabilities, competitive advantages, among others.

The total revenue from the Serviceable Obtainable Market is an estimated calculation of your business's market potential, considering the realistic market and competitive context. This metric is crucial for understanding your business's probable revenue generation potential.

Practical Examples

Local Market - Hair Salon in a Neighborhood:

•  Total Addressable Market: 10,000 people in the neighborhood x 50% potential customers x R$ 1200 per year = R$ 6,000,000.

•  Serviceable Available Market: 50% is target audience = R$ 3,000,000.

•  Serviceable Obtainable Market: 20% market share = R$ 600,000.

Regional Market - Healthy Meal Delivery Service:

•  Total Addressable Market: 1 million people in the region x 30% potential customers x R$ 1,200 per year = R$ 360 million.

•  Serviceable Available Market: 10% of the regional population (100,000 people) = R$ 36 million.

•  Serviceable Obtainable Market: 5% market share = R$ 1.8 million.

National Market - Sustainable Clothing E-commerce:

•   Total Addressable Market: 100 million people in Brazil x 5% potential customers x R$ 500 per year = R$ 25 billion.

•  Serviceable Available Market: 2% of the national population (2 million people) = R$ 1 billion.

•   Serviceable Obtainable Market: 1% market share = R$ 10 million.

International Market - Language Learning App:

• Total Addressable Market: 1 billion people globally x 10% potential customers x R$ 100 per year = R$ 10 billion.

• Serviceable Available Market: 20% of the global population (200 million people) = R$ 2 billion.

• Serviceable Obtainable Market: 0.5% market share = R$ 10 million.

Understanding and correctly using these metrics is essential for evaluating your business's market potential. At Vibz, we help you calculate these numbers practically and directly, providing a clear vision of what to expect in terms of revenue and growth. Take advantage of this tool to plan solid strategies and achieve success!