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When planning and developing academic programs, it is important for academic leaders in colleges and universities to use a framework that considers the total addressable market (TAM), serviceable available market (SAM), and serviceable obtainable market (SOM). TAM refers to the total number of potential students who could be served by the program. SAM represents the portion of TAM that can be reached by the university, and SOM indicates the portion of SAM that is willing and able to pay for the program. This ensures the programs are designed to meet the needs of the students in the target market, and that the institution can generate enough revenue to sustain the program.
Total Addressable Market (TAM)
In higher education, total addressable market (TAM) is a tool that can be used by leaders to assess new academic programs. The TAM approach was originally developed in the business world to size up potential markets for products and services. In recent years, however, it has been adopted by academic leaders to think about the potential for new programs.
There are several ways to calculate TAM. The most common approach is to take the total number of potential students in each field and subtract the number of students who are already enrolled in similar programs. This gives you the total addressable market for your new program. To calculate TAM, colleges and universities can use data from accredited institutions. Information on enrollment, tuition, and other factors can be used to estimate the size of the potential market for a given program.
TAM can also be calculated at the state or regional level. This can be helpful if you're trying to assess the potential market for a new program that is only offered in one state or region. To calculate TAM, you will need to gather data on the total number of potential students in your given field and the number of students who are already enrolled in similar programs. This data can be found in a variety of sources, including government data sets, college and university websites, and private research reports. TAM is only one factor to consider when making this decision. Other factors, such as the costs of launching and maintaining a new program, should also be considered.
Serviceable Available Market (SAM)
To estimate SAM, educational leaders can consider the number of students who are currently enrolled in similar programs at other institutions. This can be done by looking at data on student mobility which is available from the US Department of Education’s National Center for Education Statistics (this level of data is not available in Canada). In education markets, the concept of a serviceable available market is often used to help assess new opportunities. When looking at the potential for a new academic program, institutions should consider the portion of that market that would be willing and able to pay for the program.
There are several factors that can influence the size of the serviceable available market. If there is a large unmet need for the program, then there will be a larger potential market for it. The price of the program is another factor. If the program is priced too high, then affordability becomes a barrier.
The proximity of potential students to the program is important. If the program is only offered at a school that is far away from where most potential students live, then fewer people will be willing or able to enroll. The availability of similar programs also needs to be taken into consideration. If there are already several similar programs available, then the market for the new program may be smaller.
By taking the time to understand the size of the serviceable available market for a new academic program, institutions can make more informed decisions about whether to launch the program. If the market is large enough, and there is enough unmet need, then the program may be worth pursuing. However, if the market is small or there is a lot of competition, then it may be best to focus on other opportunities.
Serviceable Obtainable Market (SOM)
The Serviceable Obtainable Market (SOM) is a tool that can be used to assess the potential demand for new academic programs. The SOM approach is based on the concept of market segments and targets those segments that are most likely to generate demand for a new program. To calculate SOM, colleges and universities can use data on the number of students who have the financial means to pay for the program. This information is available from the US Department of Education’s Integrated Post-Secondary Education Data System.
Academic programs are often developed in response to external factors, such as changes in the workforce or shifts in the economy. However, it is important to assess the potential demand for a new program before investing significant resources into its development and implementation. The SOM approach can be used to identify market segments that are most likely to generate demand for a new program and to assess the viability of developing and implementing the program.
SOM begins with the identification of potential market segments. Market segments are groups of individuals or organizations that share similar characteristics and needs. Once potential market segments have been identified, the next step is to assess the viability of each segment. This assessment includes an evaluation of the segment's size, growth potential, and willingness to pay for a new program.
Integrating TAM, SAM, and SOM strengthens the business case for new programs to internal and external stakeholders. By using TAM, SAM, and SOM to guide their planning and development process, educational leaders can ensure their academic programs are designed to meet the needs of the students in the target market. This approach also ensures the institution can generate enough revenue to sustain the program.