The TAM, SAM, SOM Framework for the Bangladeshi Entrepreneur

Your brilliant idea, the one you believe is destined to be the next big thing, is a powerful force. It drives you to work late nights, to take risks, and to dream big. But in the world of business, dreams must stand on a foundation of reality. The overinflated ego of a founder, convinced their idea is a billion-dollar certainty, is a common start-up killer. It leads to misallocated resources, unrealistic forecasts, and ultimately, failure.

The core of this problem lies in a lack of market awareness. Many founders confuse a massive “billion-dollar” market with their actual opportunity. This is where the TAM, SAM, SOM framework becomes not just a tool, but a survival guide. It forces you to move from a grand vision to a grounded, data-driven plan. This framework is particularly vital in a dynamic, emerging economy like Bangladesh, where market data can be fragmented and consumer behavior is rapidly evolving.

The Big Picture: TAM (Total Addressable Market)

The Total Addressable Market (TAM) is the entire revenue opportunity if you captured 100% of the market. It represents every single person or business in the world who could potentially buy your product or service. Think of it as the “pie-in-the-sky” number. It’s an aspirational figure.

• How it works: You calculate the broadest possible market. For example, if you’re launching a food delivery app, your TAM could be the entire population of Bangladesh.
• Why it’s important: It validates if a market is big enough to pursue at all. Investors want to see a large TAM because it demonstrates the potential for scale. It shows that even a small slice of a huge pie is a valuable business.
• A Bangladeshi perspective: The consumer market in Bangladesh is massive. With a population of over 170 million and a rapidly expanding middle class, the TAM for many sectors is significant. For example, the pharmaceutical market in Bangladesh is a multi-billion dollar industry, with local companies meeting 98% of the domestic demand. The total market for medicines is the TAM for a new pharmaceutical company, though capturing all of it is impossible.

The Realistic Slice: SAM (Serviceable Addressable Market)

The Serviceable Addressable Market (SAM) is the portion of the TAM that your business can actually serve. It takes into account real-world limitations like your product’s specific features, your distribution channels, and geographic or language barriers.

• How it works: You narrow down the TAM. For a food delivery app, the SAM might be the population of Dhaka and Chattogram, as your service is currently limited to these cities. It is the audience that your product is specifically designed for.
• Why it’s important: It grounds your big market numbers in reality. It is crucial for planning your go-to-market strategy and setting realistic growth goals. It is your immediate target.
• A Bangladeshi perspective: Consider the example of Pathao. Their TAM would be anyone in Bangladesh who needs transportation or delivery. However, their initial SAM was much smaller. It was the population of Dhaka with smartphones who needed a quick, on-demand transport solution. They then expanded to other cities, thus growing their SAM.

The Achievable Target: SOM (Serviceable Obtainable Market)

The Serviceable Obtainable Market (SOM) is the slice of the SAM that you can realistically win in the next 1–3 years. This is your most important number. It factors in your execution capacity, your team size, your marketing budget, and the competitive landscape.

• How it works: You take your SAM and apply a realistic market share percentage based on your resources and competition. For our food delivery app, you might decide you can realistically capture 5% of the serviceable market in Dhaka and Chattogram in your first year. That is your SOM.
• Why it’s important: This number forces realistic planning. It anchors your revenue forecasts to achievable milestones and is the basis for setting sales targets and hiring plans. This is the number you present to investors when discussing your short-term revenue projections.
• A Bangladeshi perspective: Think about Chaldal. Their TAM is the entire grocery market of Bangladesh. Their SAM is the population of major cities they serve. Their SOM is the realistic market share they can capture each year, based on their investment in logistics, marketing, and technology, as well as the presence of competitors like Foodpanda and local players.

Data and Reality: The Bangladeshi Context

Market sizing in Bangladesh presents unique challenges. Unlike developed economies with abundant, reliable data, information here can be scarce or fragmented.

• Top-down vs. Bottom-up: The top-down approach starts with the big market numbers (TAM) and works its way down. This is useful for initial validation. The bottom-up approach is often more credible. It starts with your target customers and builds up. You calculate how many customers you can reach, their average spending and then extrapolate. For example, a bottom-up approach for a small e-commerce startup might be: “We can serve 5,000 customers in our neighborhood, and each will spend an average of BDT 1,000 per month. Our SOM is BDT 50 lakh per month.” This is a much more actionable number.
• The “Jugaad” Factor: In a country where informal markets are huge, you must be creative with your data. Don’t just rely on online reports. Conduct your own surveys, do focus groups, and talk to potential customers and competitors. The street-level insights you gain can be far more valuable than any fancy report.
• Case study: 10 Minute School: This ed-tech company’s TAM is every student in Bangladesh. Their SAM is the digitally literate student population with access to smartphones. Their SOM is the segment of students they can realistically capture through a mix of free content and paid premium courses. Their success lies in understanding the immense size of their TAM while building a strategy focused on a specific, achievable SOM. They scaled not by trying to reach everyone at once, but by systematically growing their SOM, one student at a time.

Key Takeaways for Students and Professionals

• Start with SOM: When you begin your business plan or present an idea, lead with your SOM. This shows you are grounded in reality and have a clear, executable plan.
• Validate your numbers: Don’t just use assumptions. Use data. Conduct primary research. Speak to people. Your numbers should be defensible and based on real-world insights.
• Embrace the “S” in SOM: Your serviceable obtainable market is a fluid number. It grows as your capacity grows. Your goal is not to stay small but to have a clear roadmap for expanding your SOM over time.
• The TAM is for inspiration; the SOM is for execution: Use your TAM to remind yourself of the big opportunity. Use your SOM to set your daily, weekly, and yearly goals.

Are you still convinced your idea is worth billions today? Or are you ready to do the hard work of finding your specific, obtainable market and building a business that can truly thrive? The most successful businesses are not built on hype, but on a clear, honest understanding of their market, starting with the number that truly matters: your SOM.

C. Basu.