In this tool, we will define a top-level population called "Total Available Market" (TAM) and then subdivide that population into smaller, more specific segments that may have different assumptions about how you reach them, how you might define adoption rates, or your potential market share. These segments can be used later in the Market Sizing Tool to forecast the sales volume and revenue potential of your hypothesis.
All of the segments' inputs can be entered in terms of ranges (uncertainty) and change over time (forecasts). Just put in the best data you have at this time. The goal is to understand how the opportunity might differ between market segments and which are the most interesting for your business to target.
The Market Segmentation Model is the foundation upon which your eventual revenue forecast and market opportunity sizing will be built. However; Not all segments of the market have the same potential applicability or need for your product offering. So, it’s important to understand how market segments differ and what factors drive those differences, not only to more accurately size the opportunity and plan if, how, and when to pursue those segments, but also to understand which assumptions have the biggest impact on the relative size of the opportunity and how they differ between segments.
You will likely need to make some assumptions within your segmentation model that have limited evidence to support them. But anchoring lower confidence segmentation assumptions on higher confidence segment data can help you better assess the lower confidence assumptions' materiality and which one's merit further investigation and evidence gathering.
