[Market] 3. SAM / SOM are not 'market size'. Why does your strategy collapse if you mistake the 'addressable range'?

As I wrote last time,
market selection is not about 'finding a large market'.

It is about carving out a space where the conditions for winning are met.

Click here for the previous article

What do you do after carving out a market?

There is only one answer.
Decide how to capture it

This is where the following first comes into play:

SAM / SOM

However, many companies make mistakes here as well.

They use SAM / SOM
merely as a classification of market size.

TAM is a large market
SAM is a slightly narrower market
SOM is an even narrower market

This understanding alone is not enough.

That is
just cutting the market into smaller pieces.

What is truly important is

how far you can reach
where you start capturing
in what order you expand

In other words, SAM / SOM are
not a description of the market.

They are a blueprint for how to attack.

Choosing a market alone is not yet a strategy.
It only becomes a strategy the moment it is broken down into how to capture it.

1. Even if you choose a market, it is not yet a strategy

Last time, I wrote about market selection.

Which customer segment with which problem should we target?
Where are the conditions for us to win aligned?
Where should we capture first?

Up to this point, it is important.

However, many companies stop here.

"We are going after this market."

Just by making that declaration, they feel like they have moved forward.
But in reality, the real work starts from there.

Even if you choose the same market,
the results will be completely different depending on how you capture it.

Companies that try to capture broadly and end up spreading themselves too thin.
Companies that enter narrowly and deeply to build a foothold.

The former
ends up with vague customer understanding and weak value propositions.

The latter
creates a path to victory starting from the customers they resonate with.

What creates the difference
is not the name of the market.
It is how you capture it.

In other words, what you should decide with SAM / SOM
is not the market size itself.

How far you can realistically reach,
and where you will capture first.

If you get this wrong,

your sales plan,
product requirements,
hiring,
and financial planning
will all be misaligned.

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2. What are SAM / SOM?

Let's organize this first.

TAM is the theoretical maximum market size.

It was the "dream maximum" that ignored constraints.

So, what is SAM?

SAM (Serviceable Available Market)

SAM is the market that we can realistically reach.

What we mean by 'reach' here is not
simply that customers exist.

Can reach,
Can propose to,
Can implement for,
Can support.

Only when these conditions are met does it become SAM.
And then, SOM.

SOM (Serviceable Obtainable Market)

SOM is the market you are actually going to capture first.

This is important.

SOM is not the 'scope you could theoretically capture.'
It is the scope you can realistically win with your initial resources.

In other words,

TAM = Ideal maximum value
SAM = Reachable scope
SOM = Capturable scope

In this order, it descends from abstraction to reality.

Many companies,

Dream with TAM,
Feel secure with SAM,
And get greedy with SOM.

However, in practice, the opposite is what matters.

The first thing you should look at is
how small you can make it to win.
.

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3. What many companies get wrong about SAM / SOM

Many companies think like this when creating SAM / SOM.

'We will target mid-sized companies in this industry.'
'Companies in this region are our target.'
'We will include up to this budget range.'

At first glance, it seems plausible.

However, this segmentation alone is still too rough.

Why?

Because 'reachable' and 'winnable' are different.

They are in your sales target.
You can get referrals.
You can even have sales meetings.

Even so, there are countless markets you cannot win.
The reason is simple.

The pain point is weak
Decision-making is slow
Alternatives are strong
Implementation is heavy
It does not continue

CAC swells before LTV

In other words,
If you segment SAM / SOM only by geography or industry,
you cannot see how to win.

There is another common mistake.
Making SOM a 'market share goal'.

Capture 5% of the market
Aim for 10% in 3 years

These kinds of discussions come up often.
However, those numbers themselves have no meaning.

What is important is that 5%,

from which customer segment,
through which channel,
with what kind of proposal,
at what speed,

will you capture it?

SOM is not a number.
It is the terrain where you win first.

--

4. SAM is the 'reachable market', SOM is the 'market to win first'

If you are using SAM / SOM in practice,
this understanding is sufficient.

SAM is the reachable market
SOM is the market to capture first

These two may seem similar, but they are completely different.

For SAM,

"Is it possible to sell?"
"Is it possible to implement?"
"Is it possible to operate?"

you look at these.

In other words,it is the reality of the supply side.

On the other hand, for SOM,

"Can we win with our current resources?"
"Can we create our first track record?"
"Will our learning speed increase?"

you look at these.

In other words,it is the reality of the attack sequence.

What is important here is,

that it is not the case that
the smaller the SOM, the weaker you are.

It is actually the opposite.

Companies with vaguely broad SOMs are the weakest.

Because,

Trying to sell to everyone
As a result, it resonates with no one
Proposals become diluted
Product requirements become scattered
Learning slows down

That is why.

Conversely, companies with a sharp SOM are strong.

The initial customer profile is clear
The pain points are deep
Proposals are concrete
Implementation is fast
References accumulate
Easier to expand into surrounding markets

In other words, SOM is not
'thinking small'.

'Thinking in the order in which you can win'

is what it is.

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5. Practical Framework for SAM / SOM

In practice, it is best to break it down in the following order.

(1) Segment SAM by 'conditions under which you can deliver'

First, it is not enough for the target customer to simply exist.
Trim it down based on conditions where you can realistically deliver.

- Do you have channels where your company can sell?
- Are there touchpoints where you can turn them into business opportunities?
- Can you manage implementation support?
- Can you make customer success viable?
- Can you meet legal regulations and security requirements?

At this stage,
even if it is theoretically attractive,
markets you cannot reach right now are dropped.

(2) Find the 'segment with deep pain' within SAM

Just being able to reach them is not enough.
Within that, find the segment that is struggling the most.

- High cost of inaction
- Directly linked to the person in charge's evaluation
- Existing methods have reached their limits
- Easy to budget for
- Easy to explain the reason for implementation

Here, you can see not the market where you can sell, but the
market where you can gain traction quickly.

(3) Narrow down the SOM to a 'unit you can fully win'.

Next, ask yourself.

Which customer segment will you capture first?
Do not be greedy here.

Do not cross industries
Do not increase use cases too much
Do not widen the price range too much
Do not increase implementation requirements too much

The initial SOM should be,

narrowed down to a unit where sales, implementation, retention, and referrals can cycle.

(4) Decide the order of expansion after capturing it

The SOM is not an isolated point.
Design it including where you will expand from there.

- Expand to adjacent customers with the same issues
- Expand to other departments of the same customer
- Expand to other uses with the same implementation assets
- Expand to nearby industries where the same track record is effective

If you can see this far,
the SOM is not just a narrow market,
but the starting point for expansion.

--

6. The moment it falls into 'how to capture', it becomes a strategy

Just choosing a market is still vague.

However,

How far can you reach?
Where will you start?
How will you expand?

Once you narrow it down to this point,
management suddenly becomes concrete.

You can see the number of sales staff needed.
You can see the necessary feature development.
You can see the onboarding load.
You can see the required capital and recovery speed.

In other words, SAM / SOM is
not a discussion about market size.

It is a discussion about resource allocation.

That is what it is.

Where will you deploy sales?
What will you build first?
Which customers will you turn away?
Where will you build your track record?

Only when these are decided does it become a strategy.

Conversely,

a company with vague SAM / SOM
will have everything else be vague.

The customer base is too broad.
The proposals are too broad.
The development is too broad.

However, you won't win anywhere.

What is important is
not to make it look big.
It is to win in a narrow space.

That narrowness creates the next expansion.

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Conclusion

SAM / SOM is
not a term for organizing market size.

It is a term for deciding how to capture it.

SAM is the reachable market.

SOM is the market you capture first.

What you really need to look at here is not the breadth of the market, but the order in which you can win.

Therefore, this is what you should ask.

It is not 'how big is the market?' but 'where can we win decisively right now?'

A market is meaningless just by choosing it. It only becomes a weapon the moment you break it down into how to capture it.

Next time preview

[Market Series]

1. TAM (Illusion)

2. Market Selection (Where to capture)

3. SAM / SOM (How to capture) ← This time

4. Product (What to capture with)

5. Game Change (Changing the rules)

6. Summary (What is a market?)

Next time, we will discuss the product.
The market has been decided, and the approach has been determined.
Now, there is only one question left to ask.

What will you use to capture it?

A product is not about making what you want to make.
It is about deciding on the weapon to fully capture the market.