Don't forget a nice way to double check your competition after you have picked some key words is simply go to google search and use: allintitle:"insertkeywords" allinanchor:"insertkeywords" Those two little tools are also nice for checking competition in your market with your keyword choice.
In my opinion the most important thing is keyword relevancy and number of searches per month for that keyword. If you have a keyword that only a few people search for per month and it's totally irrelevant to what your website is about then you're targeting a really BAD keyword! On the other hand if you're attempting to rank for a keyword that thousands of people search for per month and that keyword is exactly related to what your website is about, then you're on the right path
Keywords fall into various categories like primary keywords and secondary keywords.Primary keywords are those keywords which are your buyers keywords means that keyword would be very specific and only buyers would enter those keywords.Secondary keywords are little more generic in nature, so visitors are not always buyers. Before choosing your keywords consider following points: Keyword Relevancy Categorize keywords (Primary and Secondary keywords) Global monthly searches for that keyword Local monthly searches for that keyword Competing pages behind that keyword etc