The difference between the size of a market and the potential of a market can be described as the difference between the total market versus the total available market (TAM), or better still, the served available market (SAM)
An even more accurate way of reflecting market potential, is to compute the SAM, or the Served Available Market. Before doing this, one needs to understand how a product or service will be positioned, placed, priced and promoted and perceptions of direct competitor products, which is best served through primary research, and how much is being spent totally on these competing products or services. Referred to as the Served Available Market, this number reflects your actual market opportunity, more accurately.
Another way to understand market potential is as follows:
The market size is the total of all revenue generated in a particular market segment during a period. For example, the ecommerce industry may be 500 billion dollars this year - the total amount of money spent on purchasing on the web.
The addressable, or potential market, is the total sales that your company could achieve if it closed every prospective customer, in its area of operation e.g. ecommerce retailing for physical goods (understandably, this would not include the additional dollars spent in the market on purchasing services online). The total of all prospective customers is often referred to as the addressable population.
infoAnalytica helps companies understand their potential market size through a combination of primary and secondary research and eventual quantitative analysis. Some of the important findings that need to be analyzed through this kind of research include:
Determination of overall target population
The profile of your target customers (revenues, number of people, type, industry, etc.)
Specific product needs depending on customer type
Potential purchase volume per company
Expected pricing levels
Product SWOT versus competitors in terms of addressing customer needs
Once infoAnalytica analyzes these conclusive findings, a clear assessment of Market Potential is developed and provided to the customer.