Target Market and Beachhead
How to name and size the market you build the company to win, choose the first part of it to win, and grow from one to the other.
“It is a €1 billion market. We only need to capture 2 to 3%.”
Investors hear this sentence often. It ends the conversation.
The number comes from the top down. No customer is named. A team that starts from a fraction of the total market is telling investors it does not know who its customers are or where it wins.
The fix is to name your markets first and size them from the bottom up. You need two: a target market, the market you build the company to win, and a beachhead, the first part of it you win.
Teams get the two markets wrong in one of two ways.
Mistake 1: a beachhead that leads nowhere. The team picks the beachhead first, because it is accessible, not because it leads anywhere. It wins quickly, then finds itself stranded: the wrong geography for its regulatory strategy, the wrong payer for its reimbursement model, the wrong evidence for the buyers who come next. Rebuilding those assets costs years and a funding round.
Mistake 2: going straight at the target market. The team skips the beachhead and sells to the whole target market from day one. Effort spreads across too many buyers, no early customer becomes a reference, and there are no clear wins to show investors. The cash runs out before the next round.
This framework shows you how to work in the right order. Name the target market. Size it from the bottom up. Choose a beachhead inside it that you can win quickly. More importantly, it must build assets that transfer to the target market. Then execute from the beachhead out: win it, then grow into the target market.
TAM, SAM and SOM: the standard, but not enough
TAM, SAM and SOM are the industry standard for market size, and investors expect them. Each is a revenue figure, in $/€ per year, with boundaries. SAM is limited by the segments, geography and product fit you can serve. SOM is limited by competitors and by your own resources.
The boundaries are usually broad: a country, a disease area, “hospitals”. They rarely name the buyer, the setting or why that buyer would choose you. Naming those is the job of the target market and the beachhead.
| Number | Means | Bounded by |
|---|---|---|
| TAM, Total Addressable Market | Revenue if every possible customer adopted | Nothing: everyone who could buy |
| SAM, Serviceable Addressable Market | Revenue from the customers you can serve | Segment, geography and product fit |
| SOM, Serviceable Obtainable Market | Revenue you can realistically capture in your target market | Competition and your resources |
Target market and beachhead: the choices behind the numbers
The target market and the beachhead are choices you make. Each is a description: who, where and for what use. SOM measures the target market. BHM, the Beachhead Market, measures the beachhead.
| Beachhead | Target market | |
|---|---|---|
| What it is | A narrower group inside the target market, defined by a stated attribute such as region, setting or buyer type | The segment, geography and use case you build the company to win |
| Its job | Small enough to win and dominate quickly, to show investors you have derisked the market and scaling is now the issue | Large enough to support the company and an investor return |
| What it leads to | The rest of the target market | The broader market in SAM |
| Its number | BHM | SOM |
A good target market does more than size the business. It positions you to win the broader market: the customers it brings, the evidence it builds and the advantage it proves open the rest of SAM.
Both markets must be specific enough to judge. “Hospitals in Spain” is not a market. “Heart failure units in Spanish public hospitals” is.
A beachhead fits its target market only when all three hold:
- Its users and buyers are a subset of the target market’s.
- Its solution uses the same approach.
- Its key advantages carry over.
Size from the bottom up
Discover the markets first. Then calculate their size.
Size each one from the bottom up: number of buying entities × units per entity per year × price per unit. The arithmetic is simple. The counts, the segment boundaries and the price need outside evidence: registries, hospital data, published counts and interviews.
Example (illustrative): post-discharge heart failure monitoring.
| Buying entities | Patients per entity per year | Price per patient per year | Market size | |
|---|---|---|---|---|
| Beachhead: BHM | 30 | 500 | €600 | €9 million |
| Target market: SOM | 300 | 300 | €600 | €54 million |
Every input should trace to an interview, a document or a public source.
Concentration matters as much as size. Two markets of the same size can need very different businesses. Bottom-up sizing shows the difference, because it counts the buyers. A top-down share hides it.
| Concentrated: 300 units | Fragmented: 90,000 patients | |
|---|---|---|
| Buyers to win for 10% of the market | 30 | 9,000 |
| How you reach them | Direct sales, one meeting at a time | Channels, partners or marketing |
| What each sale can cost you | Tens of thousands of euros | A few euros |
| What a beachhead looks like | A few units in one region | One channel in one city |
| Decision path | Institutional: committees and budgets | Individual: each patient decides |
Neither is better. Each needs a different go-to-market, a different team and a different amount of capital. Investors will ask which one you have.
Order: plan from the target market in, execute from the beachhead out
Plan in one direction and execute in the other.
| First | Then | |
|---|---|---|
| Planning | Choose the target market and set out its hypotheses: users, buyers, value, influencers and revenue model | Choose the beachhead inside it, and note which hypotheses change |
| Execution | Win the beachhead | Grow into the rest of the target market |
The most common mistake is to pick the beachhead first: find a first customer, then look for a market around it. That produces a beachhead that leads nowhere. A strong beachhead result without a credible path to the target market is a warning, not a success.
Set out the target market hypotheses first. Work on the beachhead once they are in place.
Choosing a beachhead
Compare several candidates side by side before you commit to one. Judge each against 13 criteria: the four GAITS domains plus the team. “Against” on any must-have criterion rules a candidate out. The should-have criteria help you choose between candidates that pass.
| Area | Must have | Should have |
|---|---|---|
| Clinical | Urgent, unmet need: early adopters will try an unproven solution. Independent Clinical Champion: clinicians, named by role, advocate with no financial tie to you. | Fits the clinical workflow: works without major changes to how care is delivered. |
| Market & Business | Someone will pay: a reimbursement route or a budget line exists, and the purchase can be approved in time. Leads into the target market: learning transfers, success is recognized in the target market, and the beachhead is one move from it. | Reachable and concentrated: you can get interviews and pilots, and it is small enough to dominate. Referenceable early adopters: early customers are credible and visible. |
| Regulatory | Authorization fits: the pathway is defined, and approval fits the beachhead timeline and your runway. | Equivalence route: an existing device or approval can shorten the path. |
| Technology | Same advantage drives both: the technical feature that wins the beachhead is the one that wins the target market. | Works in the setting: maturity, IT, data security and interoperability needs can be met with little custom work per site. |
| Team | Can serve it fully: the team can sell to, deliver to and support every beachhead customer with its current people and cash. | Has a head start: founders’ relationships, language or location give access to the first buyers. Committed to this segment: founders will spend the next two to three years on these users and this setting. Evidence: time commitment, prior work in the setting, or a founder who comes from it. |
Record one finding per criterion, with one line of justification:
- Evidenced: recorded evidence shows the candidate meets it.
- Against: recorded evidence shows it does not.
- No evidence: nothing on record bears on it.
A criterion judged on reasoning alone is “no evidence”, never a strength. Profile the candidates. Do not add up a single score. Keep the candidates you set aside, with the reason, and reopen one if circumstances change.
Positioning the beachhead: one move from the target
The target market is fixed. You chose it first. The beachhead choice decides which way you travel to reach it, and how much risk the move carries.
The beachhead is always the starting point: today’s customers and today’s solution. There are three possible positions:
- Same customers. The beachhead serves a small number of the target market’s own buyers. You reach the target by improving the solution and selling to more of the same buyers. This is the lower-risk move.
- Same solution. The product that wins the beachhead is the product the target market needs. You reach the target by selling it to new customers. Risk rises faster on this axis.
- Neither. The beachhead differs from the target in both customers and solution. The move crosses both axes at once. This is the bridge to nowhere. Avoid it.
Use the figure to judge the must-have criterion “Leads into the target market”. One move on one axis is evidence for it. A move on both axes is evidence against it. If no candidate is one move away, plan two steps, one axis at a time. Each step that works becomes the new starting point.
Example. The target market is heart failure units in Spanish public hospitals.
- Same customers: the same units, with a first version that monitors but does not yet alert.
- Same solution: the full product in public hospitals in Catalonia, then the rest of Spain.
- Neither: a consumer app sold to patients at home.
Day’s figures come from innovation projects in established companies. For a start-up they are a guide, not a measured rate.
What transfers to the target market
For each beachhead candidate, place every target market hypothesis in one of three classes:
- Tests it: the beachhead gives direct evidence on it.
- Inherits it: it carries over to the target market if the beachhead validates.
- Needs separate testing: the beachhead cannot inform it, so you must test it in the target market anyway.
The more high-impact hypotheses a beachhead tests or inherits, the better the path. Decisions made for the target market do not carry over automatically. Check each one again for the beachhead.
The path changes what must transfer. On the same-customers path, buyer relationships, reimbursement and evidence carry over, but the improved solution may need a new or extended authorization. On the same-solution path, the authorization and technical evidence carry over, but new customers may need a wider indication, new geographies or new payers.
Regulatory warning. An approval in one region does not transfer to another. A CE mark under the MDR does not give FDA clearance. State what carries across and what you must obtain again.
Checklist
- Our target market names a segment, a geography and a use case.
- Our SOM is sized bottom up from the target market, and each input has a source.
- We have target market hypotheses for users, buyers, value, influencers and revenue model.
- We have at least two beachhead candidates inside the target market.
- Each candidate passes the three-part fit test.
- Each candidate has a finding on all 13 criteria, and none is “against” on a must-have one.
- We know which target market hypotheses each candidate tests, inherits or leaves untested.
- Each candidate is one move from the target market: same customers or same solution, not neither.
Common mistakes
- Choosing the target market that makes the SOM look good.
- Picking the beachhead first, or calling it the market.
- Skipping the beachhead and selling to the whole target market from day one.
- Sizing from the top down: “2 to 3% of a big number”.
- Choosing a beachhead that differs from the target in both customers and solution.
The framework maps onto the Healthcare Business Model Canvas as follows.
- The target market and the beachhead each get their own canvas.
- SOM and BHM go in block 5a, Market Size, of their canvases. Market size is a discovered block: the inputs come from evidence, then the arithmetic follows.
- The target market hypotheses in this framework are rows 2 to 5: 2 Customers, 3 Value Prop, 4 Influencers and 5 Revenue Model.
- When you choose a beachhead, copy the target market canvas and note which blocks change.
Sources
- G. S. Day, “Is It Real? Can We Win? Is It Worth Doing? Managing Risk and Reward in an Innovation Portfolio,” Harvard Business Review, December 2007.
- “TAM-SAM-SOM: Guiding the Development of a Realistic Revenue Model,” A Marketing Handbook, CUNY Pressbooks.
- “TAM vs. SAM vs. SOM explained for founders,” Rho.
Version 1.0. November 2026. Feedback: jcollins11@mgh.harvard.edu