Total Addressable Market (TAM)

Definition of Total Addressable Market (TAM)

The total revenue opportunity available if a product or service achieves 100% market share.

Explanation of Total Addressable Market (TAM)

Total Addressable Market (TAM) refers to the total revenue opportunity available for a product or service if it were to achieve 100% market share. It represents the maximum potential market size, encompassing all possible customers and sales opportunities within a specific industry or market segment. For example, the TAM for a new smartphone might include all potential buyers globally who are in the market for a smartphone. Calculating TAM involves assessing the target audience, market demand, and competitive landscape. It provides businesses with a comprehensive understanding of their growth potential and helps in strategic planning, resource allocation, and investment decisions. By analyzing TAM, companies can identify market opportunities, prioritize target segments, and set realistic goals. It is a critical metric for startups seeking funding, as it demonstrates the scalability and revenue potential of their business idea. Understanding TAM is essential for making informed business decisions and achieving long-term success.

This dictionary entry was written by

Per-Gulbrand Peter Braathen

With a foundation in doctoral-level research, Per-Gulbrand Peter Braathen is a seasoned expert in the areas of marketing, branding and communication. His proficiency extends to marketing management, branding and communication strategy. Braathen's experience is underscored by his rich background from various industries, including entertainment. A distinguished alumnus of the USC Marshall School of Business, Braathen boasts a Master of Science in Marketing, complemented by a Graduate Certificate in the Business of Entertainment from the USC School of Cinematic Arts as well as two undergraduate Bachelor degrees from the esteemed University of Southern California.