Knowing your potential market (if you are starting a business or expanding it into new markets) is absolutely vital. If you do not know your potential market, you will not have a good idea as to whether your products are a good fit for that market.
When a business is going to start up or expand, it needs to conduct a market analysis. This analysis would take an in-depth look at the people to whom the business is planning to sell. For example, such an analysis would need to look at the demographic and socioeconomic data from a potential market. If a business plans to sell luxury goods, for example, it would need to make sure that there is a sufficiently large population of affluent people in the potential market area.
With such analysis, a business is going in to a new market blindly, not knowing if there is truly any likelihood that the market will be a profitable one.