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By this I mean should I focus on what the site offers or what the target market would search for (in the instances that these are not necessarily the same thing)?
Know your target audience, know your product, and experiment.
I suspect focussing on your potential visitors and their expectations and desires will usually be the best way, but if you have a target audience who already knows what they want, then a product oriented approach may be quicker for them and easier for you.
Of course, a well designed site with good internal labelling and navigation will often serve both approaches successfully, allowing you to make the best of both sets of keywords.
Search engines focus on pages [urls, actually!] not sites, so catering for both is entirely possible.
I guess the news is good or bad depending on what you're into. If you like long nights filled with keyword research, then you're in luck! The sad fact of the matter is that you have to research keywords related to the product AND keywords related to the market and determine which are MOST relevant to your site, and which will have the best results for your site.
Research is fun. Research is your friend. If do your research you'll reap the rewards of quality traffic!