Understand you market

Business development manager Backend developer

Understand Your Market
04
Positioning
Identifying

01 03

Sizing
02 Analyzing
Identifying
Guidelines
How do you narrow down the market so that things are more believable, more realistic?

- Analyze your product or service.

- Create a description of your target audience.

- Limit it by geography / access / regulation / capabilities questions.

Identifying
● What’s the difference between Market & Industry?

● How could you Identify and Prioritize your real market?

You can go many layers down to find your sub-market Example

Industry CyberSecurity

Market CyberSecurity for

Automotive

Segmented Market CyberSecurity for Automotive

in Japan / production /
connected cars post production
Sizing

Market sizing is indispensable for both, established

businesses and startups. Especially, for startups, investors
prefer an established model for estimating the market size.

Estimating your market size/share:

- Reduces the risk of misunderstanding.

- Provides the data baseline for investors to evaluate a

business opportunity.

- Articulates the short, mid and long-term growth potential.

Sizing
TAM is equal to the total possible
TAM Total Addressable Market
market demand for the product
or service you are selling.

SAM refers to the number of

customers that you are able and SAM Serviceable Available
willing to target Market
SOM shows what can be
achieved with the business idea
in the short term.
SOM
Serviceable Obtainable
Market
Sizing
Why is it Important to Use TAM, SAM, and SOM?
Early-stage startup investors will want to know the viability of your business and your startup’s
potential for growth. TAM, SAM, and SOM are helpful indicators that can answer many questions
about the potential of a startup.

For example, these indicators help you discover:

● Upside potential - Are you part of a big market. Most investors will likely invest in a business
that has a huge upside potential.

● Current viability of market - Investors will want to make sure that your target market is growing
in size and revenue.

● Current viability of startup - Investors will also want to know if the startup has the revenue to
sustain itself.
Sizing
You Should Consider..

● Geographical restrictions
● Demographic restrictions
SAM ●
●
Resources restrictions
Regulatory restrictions
● Cultural restrictions

● The offering’s limitations

● The targeting limitations
SOM ●
●
Marketing plans
Distribution channels
● Limitations relating to finance and other resources
Sizing
How To Calculate?
TAM - Number of Potential Users Who Can Buy Your Service / Product X Average price of your Service /
Product

SAM - Targeted Segment of TAM X Average Price of your Product / Service

SOM - Market Share Of Previous Year x SAM For This Year

● Market Share Of Previous Year = Actual Revenue Of Previous Year / SAM Of Previous Year.
Sizing
Example - FinTech Startup
Context:
A new FinTech Startup called “ Tak - Tech” is creating a new platform for banks, based on
machine learning, behavioural analysis and financial planning models. This platform will be
implemented in banks and will help people to manage their bank accounts in smarter, optimal,
easier and adjusted way.

INFO:
- Targeting small and medium banks.
- There are 60,000 small and medium banks branches in the world.
- This startup located in Palestine.
- Service fee = 50,000 $ per year, per branch.
Sizing
Example - FinTech Startup
TAM - 60,000 (branches) X 50,000 $ (Annually) = 3B$

SAM - Because of the platform is in Arabic and adjusted for Arab social-economical behaviours, and
taking into account the small banks system, they want to target the Arab World.
● There are 4,000 in the Arab World

SAM= 6,000 X 50,000$ = 300 M$

SOM - As there are limitations in funding, knowledge and human resources, the Startup will target
Palestine & Jordan.
● There are 300 banks.

SOM = 300 X 50,000 $ = 15M$

Sizing
Remember!
● TAM is not equal to the absolute industry value. It’s equal to the absolute market value of your service /
product after high level segmentation.
There is a “Narrowing Funnel” through TAM, SAM, SOM, but also within TAM.

● SOM is an estimate for the portion of revenue within a specific product segment that a company is able
to capture

● When setting up the price used in the previous equation, you should go ask about (WTP - Willingness To
Pay), about similar competitors prices, but more importantly, is setting YOUR OWN PRICE. (Based on
positioning, costs and your business model).

● Be Specific and Accurate when talking about customers in these equation. (In our previous example, are we
talking about Small Banks? Where? The number represent bank as a chain or branches?).
Sizing
Workshop

Take 15 Minutes
To Calculate Your TAM, SAM, SOM
● You can search and use relevant data online.
Analyzing

SWOT Analysis
A technique that new startups and established companies use to
identify their own

The tool forces startups to take a realistic look at themselves and at

their market overall. With this information, they can make informed
decisions and evaluate their position.
Analyzing
SWOT
Strengths Weaknesses

● Competitive advantage. ● Lack of Experience, Funding and Human Power.

● Assets.
● Innovative Ideas.

Opportunities
● Market Trends.
● Market Growth.
Threats
● Low Barriers to Entry for potential competitors / High
Barriers to Entry for Us.
● Highly Competitive (Competition Landscape).
● Economical / Political Crisis.
Analyzing
SWOT - Netflix
Strengths Weaknesses

● Original Content ● Prioritizing Original Content Over Proven Favorites.

● Netflix was First and is Arguably Synonymous with ● Over-dependence on North America Market.
Online Video Streaming. ● Prices Have Hiked in the Past, Angering Consumers.
● Algorithms for Suggested Shows.

Opportunities
● DVDs Purchases and Rentals are Declining.
● Younger Generations Are Ditching Cable in Favor of
Streaming.
● The Availability of the Internet.
● People Consume More Content Today Than Ever
Before in History
Threats
● Number of Streaming Competitors is Growing.
● Media Companies are Gaining Leverage and
Demanding Higher Payments for Content.
● Some Online Videos Are Viewed for Free or Even
Illegally
Analyzing
Workshop

Take 10 Minutes
To Fill SWOT Template Of Your Startup

● You can find the Template in your Email/Drive.

Positioning
Competition Landscape
The process of examining your market to identify your
competitors and figure out where they stand with
regard to other players, including you.
Positioning
Research The Competition
Startups can use market research to get a clear picture of the
competitive landscape.

Many tools like Similarweb and other online analytical tools could be
used as initial step.
Positioning
Market Mapping

Broad Products Range Higher Profitability

*
Customers * Customers in Minor Major Market Share
in Focused Various Markets Market Share
Markets
*

Narrow Products Range Lower Profitability

Positioning
Benchmarking
Positioning
Competitive Advantage

A competitive advantage is an advantage over competitors gained by

Offering Customers Greater Value.

Some of the primary methods of gaining a competitive advantage:

- Cost Leadership

- Differentiation focus

- Strategic Alliances