I always like to reverse engineer existing successful examples of buying activity.

I'm less fond of finding lots of demand only because it doesn't tell you IF or WHAT they are spending money on.

Instead, I look to affiliate directories and e-commerce sites to see what is selling like crazy, then I research who is selling and THEN I beat them at it and keep a good portion of the profits for me.

What's great about this approach is that you don't guess at what niches make money, you start with that and then figure out how to be a player in that niche.

Jeff