Market
A group of potential customers who share similar needs and characteristics that a business can serve.
Definition
A market represents the arena in which commercial dealings are conducted. For startups, it's the specific group of customers who have a problem that the company's product or service can solve, and who are willing and able to pay for that solution.
Market Analysis Framework
TAM (Total Addressable Market)
Total demand for the product category
SAM (Serviceable Addressable Market)
Portion of TAM you can realistically serve
SOM (Serviceable Obtainable Market)
Realistic market share you can capture
Market Characteristics
- Size: Total revenue potential
- Growth: Market expansion rate
- Competition: Number and strength of competitors
- Barriers to Entry: Difficulty for new entrants
- Customer Segments: Distinct buyer groups
Real-World Example
Video Conferencing Market: Zoom's market analysis
TAM: $62B global communications market
SAM: $24B video conferencing segment
SOM: $4B realistic capture based on features