What is 'Keyword Research'?
MJB explains Keyword Research and discusses different ways to find out which search terms you might want to target.
I first started using the term 'Keyword Research' some time around 2001 to describe the process of trying to find the best search terms to build a Search Engine Optimisation strategy around.
In Ye Olden Days some of the best sources of keyword data were WordTracker, (which still seems to be going strong), and the traffic estimator on Overture, (which is now transformed into Yahoo! Search Marketing).
However, as Google currently handles more than 70% of the UK search market, it makes sense to use the traffic estimator in its AdWords service as a starting point.
Use your traffic reports
If your website has been live for a while and has had some success in gaining referrals, you should be able to run a report showing the top search terms that were used to find your site. Search for these terms yourself and note any where your site appears on page 2, 3 or 4. It should be relatively easy to improve your site's ranking for these terms as your website is already considered to be a relevant match.
experimental example
I noticed recently that one of my clients had received some referrals from searches for 'Cayman Chemicals UK' - not surprising as their website is number one for this search. However, a search for 'Cayman Chemicals' finds them at the bottom of page 2.
I suspect that 'Cayman Chemicals' is used as a search term far more often, and that bumping the site up a bit for this version of the search term will gain a few more referrals.