Continuing the Niche Finder Series...
From your efforts in the last step, "Researching for Worthy Niches", you've now uncovered some products you might want to build a site around. They look like they have potential in the market. The next few steps will determine if it's worthwhile for you to build a Niche Website for what you've found.
The Second Step tells us it's time to pick some keywords that will bring people to your site that want those products.
TWO: Then you need to use a keyword tool to pin down keywords (using the seed keywords.. product names etc.. from the first step) to help you determine the volume of searches and prioritize which ones make the most sense to go after.
In these next steps, you will learn how easy or hard it is going to be to target and bring those people to your site so you can convert sales and make commissions!
You need to create a list of great keywords!
Start by choosing keywords that describe your product perfectly. Those that you think someone will type into the Google search to find your product.
Often what you find in the first step will actually hand you those keywords. Start with the product's name or the title for that product (in eBay results for example). And use those as the 'seed' keywords to do searches in your favorite keyword tool.
Side Note: Do take into consideration that some companies do protect their trademark and brand names.. so down the road when you are developing your site and picking your domain names, make sure you are allowed to use those keywords. Especially if you are an affiliate for those products. Check the merchant's TOS and do some quick searches in Google to see if others are using them.. that's a good indicator if it's ok or not.
Your Keyword Tool is your Best Friend. 
Use them right and they WILL have a profound impact on your traffic. If you use them wrong or not at all, you might still get traffic, but it will be just a fraction of your potential.
You can build a ton of links to your website and SEO it to death on page and off.. but if you don't choose the right keywords, your efforts will be fruitless. Keywords bring different flavors of traffic. They can bring info seekers, tire kickers to action takers and buyers. Choose them wisely. They will have a direct impact on your income.
At the minimum, it should tell you:
1) The volume of searches
2) How much competition you are up against. (which I'll cover in the next step)
Google's very own Keyword Tool provides this information.. You get the estimated search volume and then a bar graph that gives you a feel for how tough the competition is. You can order it based on these columns of data right in Google's interface or export to manipulate that data.
You'll find that the competition graph is relative to that search. The shorter the bar the weaker the competition and the longer the bar, the stronger. Do a few quick searches in Google on the Short, Medium to Long Bars to get a feel for what Google's range is here and if you, based on your strength, can compete.
A 50% bar graph.. might bring back PR 1 or PR2s sites and websites that are weak in other ways..
If it's 100%, that's going to be your strongest competition keywords and websites. Maybe they are PR5+ keywords. If you are weak yourself, you will avoid those until your site ages, gains popularity and experience in the SERPs.
Other FREE tools like Wordtracker's and Keyword Discovery will only provide you half the picture. You only get # of searches and that's only in the databases they draw from (not google).
Side Note: That's also something to understand. Many services out there use different ways to collect that data; different databases. Only Google's tool pulls from Google's Database.
Something I use and recommend is the SEOToolbar. After installed, you'll have an additional search bar. You can do a search on a keyword right from your browser's toolbar and it'll open up windows to your favorite keyword tool sources. It has other great features that you can use to analyze competition that will be useful down the road too (you can turn the toolbar on and off as your needs arise).
SO STEP TWO YOU'LL DO THIS...
Run your 'seed' keywords through your favorite keyword tool. This will pull synonyms and related keywords for you..
Step 3 of the process is next; eliminate keywords that aren't relevant.. I'll go into more detail with that in the next Part - Part 4.
-Matt Levenhagen
Niche Marketing - Niche Research