Effective market research, can help determine the need, estimate a product's likelihood to fill it, determine target-market demographics, even define optimal retail locations. This type of information can be uncovered a number of ways: online research, focus groups, even counting competitors' customers. This work can be done by pros, sometimes at signficant cost, or done yourself ("bootstrapped") at a modest investment of time, effort or money.
What's market research? And why must you do it? Here are two articles that offer a general overview on the topic.
Some low-budget research strategies:
Develop a thorough knowledge of whom your target market includes.
Snoop around competitors' stores, websites and customers.
CEO insights into market research mistakes