Market Analysis
Market analysis isn't meant to confirm the market is big. It's meant to discover which portion of that market is realistically reachable with the resources you have today.
“A billion-euro TAM on a slide has never closed a single deal. The realistic SOM of the next 18 months has.”
Otto GTM ObservatoryThe gap between TAM and real opportunity
TAM (Total Addressable Market) measures the theoretical market if you had 100% share. SAM (Serviceable Available Market) narrows it to who you can actually reach with your current distribution model. SOM (Serviceable Obtainable Market) is the realistic share capturable in the next 12-24 months given competition.
Most B2B business plans communicate the TAM to impress investors or the board, but plan GTM (budget, headcount, territories) on the SOM. Confusing the two levels leads to systematically unrealistic growth expectations.
Anti-patterns
Common mistake: sizing the sales team and revenue targets on the theoretical TAM instead of the realistic SOM, generating unreachable quotas and systemic demotivation of the commercial team.
Second mistake: conducting market analysis only once during the initial business plan, without updating it as the B2B market evolves, competitors enter and exit, and the original ICP fit shifts.
Practical Application
A company reports a €2,800,000,000 TAM to justify a high valuation, but its realistic SOM analysis for the next 18 months, given current geographic coverage and distribution channel, is €14,000,000. Planning the sales team on the first number instead of the second leads to headcount sizing 6 times higher than needed, with a direct impact on burn rate.