Types Of Market Sizing: Use, Terms And Definitions

Market sizing is used for various purposes across functions, but there is often confusion about — and differing opinions on — how it is calculated. Forrester recommends using three core types of market sizing: total addressable market (TAM), serviceable addressable market (SAM) and serviceable obtainable market (SOM). In the context of the Demand Unit Waterfall®, target demand equals the SAM because it reflects the number of potential demand units in the market. In this report, we define the three core types of market sizing, explain the situations in which they are most appropriate, and provide clarity on how each should be calculated.