Market Research
You've done the interviews, watched people work, framed the opportunity. And the product can still fail - because you looked inward and never looked out. A competitor already owns the space. The market is shrinking. Or your product looks like five others and nobody can say why they'd pick yours. This topic is the outward look: the market you're entering, and the spot you'll claim in it.
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This is classic product-manager and marketing ground, and it's a blind spot for a lot of designers. But positioning isn't a poster you make at the end - it's a decision that shapes what you build. Understand it, and you design products that stand out on purpose instead of by accident.
What This Topic Covers
The market side of strategy has two halves. First, reading the landscape: how big the opportunity is, who else is in it, and how defensible their position is. Then, staking your claim: what makes you different, which slice of the market is yours, and how you say it in a sentence people remember.
Market Sizing: TAM, SAM & SOM
A problem can be real and still be a bad bet, because too few people have it or they won't pay to fix it. Sizing the market is how you catch that before you spend a year building - and it gives you the numbers leadership and investors use to decide. You don't need to be an economist; you need to estimate an opportunity honestly.
TAM, SAM, and SOM
The standard way to size an opportunity is three nested circles, each a narrower and more honest question than the last:
TAM (Total Addressable Market): the total yearly spend if every possible customer on earth bought this kind of product. The ceiling.
SAM (Serviceable Addressable Market): the part of TAM you could realistically serve, given your product, region, and language. Not "everyone who eats," but "everyone your delivery reaches."
SOM (Serviceable Obtainable Market): the share of SAM you can genuinely win in the next few years, given competitors and your resources. This is the number that matters for planning.
A meal-kit app might see a $20B global market (TAM), $2B spent in its one delivery country (SAM), and a realistic $50M it could capture in three years (SOM). Notice how fast the honest number shrinks - that's the point. It ties ambition to reality.
Pro tip: Be suspicious of any pitch that leads with TAM. "It's a $20B market" is technically true and nearly meaningless. SOM is where the real conversation is.
Top-Down vs Bottom-Up
There are two ways to reach these numbers, and they check each other.
Top-down starts from a big published figure and cuts down: "the industry is $20B, our slice is maybe 1%." Quick, but easy to fool yourself with - a tiny percentage of a huge number still looks impressive.
Bottom-up builds from the ground: realistic customers times yearly price. "40,000 small agencies at about $1,200 a year is roughly $48M." More work, far more credible, because every assumption is one you can defend.
Build bottom-up when you can, and use a top-down figure only as a sanity check. If the two are wildly apart, one of your assumptions is wrong - and finding out now is cheap.
Where AI Helps
Prompt: "Help me size the market for [product] aimed at [customer] in [region]. Walk through a bottom-up SOM: estimate target customers, a realistic annual price, and the total. List every assumption separately, and suggest where to find real data for each."
AI structures the estimate; you supply the real figures.It's good at laying out the calculation and naming assumptions, but it invents confident market sizes that are out of date or simply wrong. Every number that reaches a decision needs a real, checkable source.
