This is a very popular interview question and when answered well is a great way to mark you out from other job applicants. Employers are interested in establishing what you know about their company as it helps them determine:
How interested you are in working for the company. Making the wrong decision reflects very poorly on a recruitment manager and they will do everything possible to minimise this risk. By showing a genuine interest in the company, you will position yourself as a credible applicant with a desire to succeed, fit in and develop with the role.
Your commercial awareness. By demonstrating in interview that you have extensively researched the company and have taken the time to understand their positioning in the marketplace, their key business drivers and the commercial pressures they face – you will show your ability to think outside the box and the value added you are bringing to the organisation.