So many acronyms, so little time. When preparing for an SBIR proposal there is quite a bit to learn about commercialization, markets, and finances. One important differentiation to note is the difference between the Total Market (TM) Total Addressable/Available Market (TAM) and Serviceable Available Market (SAM).
If they have not already through customer discovery and financial forecasting activities, these topics will become very relevant to you when you write the commercialization section of your proposal.
- TAM or Total Available Market is the total market demand for a product or service.
- SAM or Serviceable Available Market is the segment of the TAM targeted by your SAM
- TM or Total Market integrates a multitude of considerations from the business’s inception onward with the goal of enhancing value and growth effectiveness.
For example, let’s say you make a new medical device that helps arthritis of the hand. Your TAM would be every person in the world with arthritis of the hand. While any business owner would leap at the chance to secure this kind of market segment, it is not a realistic goal at all. Some of these users will be out of reach due to geography, income, preference, and other factors. This is where SAM comes in. SAM is an indicator of how large your market segment can be based on your geographic reach. You are based out of New York. You have access to all those diagnosed with arthritis of the hands in your home state and the tri-state area. This is your SAM. However, you are probably not the only device in your area for those suffering from arthritis of the hand. This is your TM. The total market you can reasonably expect to capture given all other factors, including TAM and SAM. The total market forecast allows the business to cater to their immediate addressable market and place their marketing emphasis on those most likely to become customers.
Why is this important for SBIR?
SBIR is not simply about inventions. Part of receiving a positive review and eventually an award is demonstrating to the reviewers that you understand marketing and commercialization and can turn your innovation into a lucrative market product. By discussing factors like TAM SAM and TM in your proposal you can illustrate your knowledge and gain a competitive advantage over applicants with less financial acumen. It is also beneficial as a business owner in general to learn all you can about marketing, forecasting, and sales.