Market Opportunity Analysis and Customer Creation
Market Opportunity Analysis
As you develop your Minimum Viable Product to test the business around your idea, it is important to also get a sense of the potential size of this business. How do you do that? Let’s go to your Business Model Canvas (BMC). On your BMC, you identified Customer Segments that you are targeting with your value proposition. For instance, children, mothers, taxi drivers, young men. We also learned that your customer segments may have beneficiaries and customers who may or may not be related with the beneficiaries.
TAM, SAM and SOM are acronyms used to characterize different subsections of a market . Below is a breakdown of the meaning of the respective acronyms:
• TAM: Total Available Market; this is the total or aggregate market demand for a product or service.
• SAM: Serviceable Available Market; this is the subdivision or segment of the TAM that your product or service targets within your reach.
• SOM: Serviceable Obtainable Market; this is the portion of SAM that you can actually capture through your product or service
What is Customer Creation?
The Customer Creation phase is the third out of four steps of the Customer Development model. This is because the entrepreneur needs to have his initial customers and sales before his business can move on to this step. According to Anastasia, the main goal of Customer Creation is to offer sales experiences that drive market demand straight into the sales channel of the company. It is also at this stage of the model that businesses can start spending more on marketing, since they have already validated their customers. This also helps prevent the entrepreneur from spending large sums of money trying to attract the wrong customer; it is only when the entrepreneur has validated his customers that he can begin to spend money marketing to them(Anastasia). If the entrepreneur needs funding for his company, this is a very good time to approach investors. The entrepreneur will have enough data at this stage to convince investors without much hassle (Holtschke).
