What is TAM?
Total Addressable Market (TAM) represents the total revenue opportunity available for a product or service if it were to achieve 100% market share, effectively assuming no competition exists. It is crucial for businesses to understand their TAM as it helps prioritize investments and strategies for growth.
Why is it Important to you?
- Market Potential – TAM provides us insights into the overall potential of a market, guiding businesses in assessing opportunities and risks associated with different segments.
- Funding Decisions – Companies often use TAM to determine the level of funding required for new products or business lines, helping to justify investments based on potential revenue.
- Strategic Planning – Understanding TAM aids us in strategic planning by allowing businesses to identify and focus on lucrative market segments, thereby optimizing marketing and sales efforts.
Why India Matters?
India is one of the fastest growing and most diverse economies in the world, with a population of over 1.4 billion people and a GDP of over $4 trillion. It is characterized by robust growth prospects, significant investment activity, and a dynamic economic environment. With the current growth trajectory, its is expected to reach $10 trillion economy in the early 2030s.
The Problem Statement
With so many diverse cultures and political landscape, finding reliable and granular data on the size and characteristics of the Indian market can be challenging, even for publicly available data. This can make life difficult for entrepreneurs, investors, and researchers to assess the potential and feasibility of their ideas, products, or services in the Indian context.
Objective
In order to help out, we have made an effort to build an excel tool called “India TAM ” aimed at helping entrepreneurs, investors, and researchers analyze and –
- Understand which cities to do pilots or studies to test business case or product-market fit, especially those focusing on extreme ends of income groups (premium and mass products)
- To determine market potential and current product penetration for startup investments.
This is the first version of the tool with plans to work on improving the model in the future. Please move to the end of the section to know more and contribute.
Features
In its first version, the model has the following features:
- Population by District – We have taken the 2011 data, the last official Census and extrapolated it to 2019 and 2024. This covers data for 644 districts
- District Tier Classification – We have classified districts into different tiers based on population size.
- Population by Income groups – We have used iSEC (Indian Socio-Economic Classification) to determine population by income groups. This data is available for 2019.
The Layout
The “India TAM Model” has 4 tabs –
- Readme – gives information about the tool.
- Dashboard – this is where the magic happens. It has three sections –
- Links (Menu) – navigation information of the tool
- Input – Takes in the user inputs such as the Projected year calculation, percentage increase in population expected, economic classification input etc.
- Output – This gives the results based on the inputs provided such as total target households based on the economic classification, rural population targets, urban population targets etc.
- Data – Consists of the data collected from sources such as Census and extrapolated data to other years etc.
- Calculations – Any other calculations needed.
Future Plans
The India TAM Model is a work in progress, and we will add new features and datasets in the future. Some of the features that we plan to bring in the future are:
- Latest Census – When completed, we will add the latest census data to the file
- More product and service categories – We aim to add products or services sold by district, to better understand consumption patterns (e.g., Kirana shops).
- More data sources and methods – We are always looking for new and better data sources and methods to enhance the quality and timeliness of the model. We are exploring the use of alternative data, such as web scraping, social media.
- More user feedback and engagement – We value the feedback and suggestions of our users, and we want to make the model more responsive and relevant to their needs and interests. We invite our users to share their comments, questions, and ideas with us, through our website, or email.
Conclusion
We hope that the Total Addressable India Market Model will be a useful and valuable tool for anyone who is interested in exploring, understanding, or entering the Indian market. We believe that the model can help to unlock the immense potential and opportunities that India offers, and to foster innovation, entrepreneurship, and social impact. We invite you to try out the model, and to join us in our journey of building a better and more inclusive India.
Challenges
- It doesn’t give a holistic view of the city. That is Mumbai’s population gets broken between Mumbai and Thane districts. Similarly, Chennai’s population gets broken between Chennai and Kancheepuram. We will address them in the future editions of this model.
- Extrapolation of population is done at a very high level (Urban/Rural and ISEC groups) and may not explain the ground reality
Sources
Link to the Tool
The tool is available in excel format and can be downloaded here.
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