What is the Difference Between Addressed and Addressable Markets?

We brought up the business plan jargon “addressable market” when we were talking about defining your target market. Here we will discuss the difference between addressed and addressable markets.

The addressable market is the largest part or group of individuals of the market which your business can target. It is the group of people who may or are likely to have some interest in the products or services your business has to offer. For example, if you are a travel agent – your addressable market is everyone who is likely to travel by air, land or sea. Of if you have a local cafe business your addressable market is anyone who walks past, who lives in the area. However, having just the addressable market as your target market is not realistic as you can’t market to a large crowd, and there will be wastage and inefficiency to your marketing efforts.

The addressed market is your target market. This is the group of people, the section of the market who are most likely to purchase your goods and services from your business. The addressed market are the people who will buy your product or service if there is no competition and the consumer-environment is perfect. For example, if our travel agent had their agency business online – they are only targeting travelers who have access to the internet. This can be further limited if the travel agent plans to limit their services to only ticket air or sea travel or booking hotels and ground transport. For the cafe business they can limit their target market to those who are most likely to use their services: such as employees who work in the same area, the people who populate the shopping precinct most of the time – it could be mothers or senior citizens.