Total Addressable Market (TAM) represents the business to achieve full revenue potential for a product or service if it were to capture 100% of the demand within a specific market. It helps businesses understand the size of the opportunity and guides strategic decisions around market entry, investment, and growth. TAM is used for Strategic planning and forecasting, and creating market sizing for new products. 

How To Calculate TAM

• Top-down: Using industry reports, details, or market research.
• Bottom-up: Based on pricing, average customer spend, preferences, purchase patterns, and volume.
• Value theory: Estimating based on customer willingness to pay and preferences.

Benefits of TAM for Marketing

• Helps prioritize product-market fit. And monetize marketing expenses accordingly.
• Attracts investor interest with growth potential.
• Guides business expansion decisions and makes informed business decisions.

Total Addressable Market (TAM) insights are helpful to craft the best market fit strategy tells you how to win it.