Calculate the Market Opportunity for Your Company or Startup using ChatGPT
Total Available Market (TAM), Serviceable Addressable Market (SAM) and Serviceable Obtainable Market (SOM)
Hey AI Enthusiast,
Welcome back to the latest Friday issue of your Solve with AI newsletter.
Not sure if you know, but I have worked in businesses of all size:
Startups (revenue less than $10M)
Small business (revenue $10-100M)
Mid size (revenue $10-250M)
Large corporations (revenue > $1bn)
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I am not saying this to brag but it is related to the topic of today. One thing that is common across all size of organizations:
Total Available Market (TAM)
What is TAM?
Total Available Market is the total revenue opportunity for your product or solution. Think of this as your marketing universe.
Guess what?
Besides TAM there are two other major components that should be a part of your marketing strategy i.e. Serviceable Addressable Market (SAM) and Serviceable Obtainable Market (SOM).
SAM and SOM are the subsets of your TAM. These are based on your businesses ability to reach and target. Here are the factors that can influence your SAM and SOM:
target market segment
geographies
competitive environment
resources
digital presence
You may have heard TAM, SAM or SOM during Shark Tank. The investors always ask about the market size. A small or local market means less opportunity to scale compare to a larger market.
For certain industries, it is easy to Google market size and it will provide you a high level number.
That’s way too generic.
It is not customized to your company, products or solutions. Our focus is to make it applicable to our company. To create a strong market size analysis, we will use the following steps:
Create a comprehensive company/product background for ChatGPT
Develop an Ideal Customer Persona/Profile using my customer GPT
Create the full prompt to perform market size analysis
Step 1: Create a comprehensive company/product background for ChatGPT
By now you know that I always like to start with data or a framework.
Most prompt engineering courses teach you to directly enter the prompts. That’s good if you are starting out but your output will be constraint. ChatGPT is your super start intern. You need to provide all the details, data and instruction for it to work its magic.
I am going to use Hubspot.com to demonstrate. If you don’t know Hubspot, it is one of the worlds leading marketing and sales SaaS company. (I have no relationship to Hubspot)
Here are the dataset you need to give ChatGPT a strong background about your company and products:
Your company name: Hubspot
Product name (not needed if you want a broad market analysis): Marketing Hub
Website: https://www.hubspot.com
Company type: B2B
Years of operation: 17 years
Size of your marketing team (you need this right size your SOM): 100+
Location: Global brand with HQ in USA
Pricing structure: Tiered pricing ($20/month for starter package and $890/month for professional package)
Objectives for the company or product/solutions: Market expansion: new buyer segments
Marketing challenges: Identify and understand new market segments
We will use this data to develop an Ideal Customer Profile.
Step 2: Develop an Ideal Customer Persona/Profile using my Custom GPT
Developing an Ideal customer profile requires ton of research. You can easily spend 8-10 hours on a single ICP.
I created a custom GPT called ICP builder so you can develop your ICP in few minutes. You can read my previous newsletter and follow the instructions to create your ICP.
Here is the output I received from ICP for Hubspot.com. My instructions were to create an ICP for Fortune 100 brand.
Step 3: Create the full prompt to perform market size analysis
Now we will get to the fun part of creating a thorough prompt. I want ChatGPT to perform market research so I am going to instruct it accordingly.
You are a market research analyst specializing in helping sales and marketing professionals identify their Targe Available Market (TAM), Serviceable Addressable Market (SAM) and Serviceable Obtainable Market (SOM). You are an expert in conducting holistic market research.
Next, we will give ChatGPT a specific goal and define the outcomes. Remember, the most specific you are the better response you will get from ChatGPT.
Goal:
Your primary goal is to calculate the Targe Available Market (TAM), Serviceable Addressable Market (SAM) and Serviceable Obtainable Market (SOM) of Hubspot.com. I will provide you details of the company and the details of Ideal Customer Profile. Here are the industry standard definitions of TAM, SAM and SOM.
Target Available Market (TAM):TAM represents the absolute maximum market size or potential revenue that a business can generate with their product or service. TAM does not take into account competition, geographical boundaries, marketing budgets, or any other market-narrowing constraints. To calculate TAM you will do industry research and identify the overall market opportunity in US dollars.
Serviceable Addressable Market: SAM is a subset of the Total Addressable Market, defined by the demographics of your product niche. The Serviceable Addressable Market shows how big of a market segment exists that can be served by your product and business model. To calculate SAM you will ask the user specific questions about the subset they want to target within the TAM and provide a US dollar output.
Serviceable Obtainable Market (SOM): Serviceable Obtainable Market provides a realistic look at what share of market a business can reasonably capture in the next 3 – 5 years. To calculate the SOM, businesses need to account for competition, marketing strategies, pricing plans, and many other variables. To calculate the SOM, you will analyze the competition, marketing strategies, and pricing plans for other similar products and services and provide SOM in US dollars.
Wait for further instructions.
Notice how I chunk my prompts to ChatGPT.
After running 1000s of prompts I have learned that chunking your prompts and interacting after each prompt improves the output.
Next, we will provide the company, product and ICP data to ChatGPT.
Company details for Hubspot.com
Company name: Hubspot
Product name: Marketing Hub
Website: https://www.hubspot.com
Company type: B2B
Years of operation: 17 years
Size of the marketing team: 100+
Location: Global brand with HQ in USA
Pricing structure: Tiered pricing ($20/month for starter package and $890/month for professional package)
Objectives for the company or product/solutions: Market expansion: expand to enterprise and Fortune 100 companies
Marketing challenges: Identify and understand new market segments
Ideal Customer Profile of the target persona:
Name: Evan Strategic
Role: VP of Marketing Operations at a Fortune 100 company
Problem:
Evan is challenged by the fragmentation of marketing tools and data across various in-house systems and large enterprise ERP and CRM platforms, leading to inefficiencies and a lack of cohesive marketing strategies.
Pains:
Struggles with coordinating marketing efforts due to disparate systems
Faces difficulties in obtaining a holistic view of marketing performance
Wastes time in manual consolidation of data for decision-making
Encounters obstacles in ensuring consistent messaging and branding across all channels
Jobs-To-Be-Done:
Unify all marketing tools and data into a single, integrated platform
Simplify and automate the data aggregation and analysis process
Foster better collaboration among marketing, sales, and other departments
Quickly adapt marketing strategies based on actionable insights and analytics
Motivation:
Evan aims to streamline marketing operations to boost efficiency, enhance the effectiveness of marketing campaigns, and drive significant business growth.
Trigger:
The realization that recent marketing campaigns underperformed due to the inability to leverage real-time data and insights, underscoring the urgent need for an integrated marketing platform.
Barriers:
Anticipates challenges in migrating to a new system without disrupting ongoing operations
Concerns about user adoption and training within the marketing team
Questions about the scalability and security of new marketing technologies
Context:
Evan has a deep understanding of marketing technologies and is proactive in seeking solutions that can bring about operational excellence and competitive advantage, but is also mindful of the implications of introducing new systems on existing processes.
Wait for further instructionsFinally, we will ask ChatGPT to perform the market analysis. I want to break down the market analysis using steps and give ChatGPT instructions on the output.
Here is how we will do that:
I want ChatGPT to collect the business information and confirm the attributes.
Allow changes or refinement where needed to keep it flexible.
Deliver each part of the market analysis one by one
Format the output in markdown style.
Follow this Process:
Build TAM, SAM, and SOM Step By Step and provide market size in US dollars for each.
Analyze the Business Information and attributes shared above.
User Confirmation: After each attribute, confirm the information with the user before proceeding.
Flexibility: Allow changes or refinements to the user's inputs at any stage.
Comparison: After preparing the TAM, SAM and SOM, I want you to perform a comparison between each in a table format.
Discrepancy and reliability: I want you to provide me details of any discrepancy in the data and the reliability assessment.
Recommendations: Based on the TAM, SAM, and SOM I want you to provide me the recommendations for market entry. There you have it. Now let’s test this in ChatGPT.
Voila!
ChatGPT not only performed market analysis but also completed the required calculations to provide average revenue possibilities. It estimated SAM as $300M and SOM as $60M which is conservative.
How can you improve this further?
By adding additional data points such as competitive details, market trends and insights.
Reply and let me know if you have questions or experienced hiccups when using this prompt.
Talk Soon,
Creator of Solve with AI.