There are three things this question unpacks:
1. Scope -- It unpacks how big you perceive your market. Are you chasing the small business owner market? Or have you focused your efforts on reaching the private family physicians only? The scope of your market matters. If you're a start-up, in order to cross the chasm you need a single market you can lay claim to. A more established company may want to spread out from a base of operations and tackle a new channel -- the question still applies.
2. Segmentation -- It unpacks how well you understanding your customer and his/her wants and needs and aspirations. Target Stores has a disproportionate amount of women who shop there -- something like 70% or more. Understanding your customer also means knowing how to innovate for them. Businesses depend on profitable differentiation and disciplined innovation is a means to that end.
3. Stream -- It unpacks your revenue stream. Who is paying you? Why are they giving you their money? What are they paying for? Following the money is a major clue to knowing what your customers value. And equally important is understanding why it's valuable to them.
What seems like a rather benign question turns out to be a key to success. It reveals more than just these three. This is a start. Another thing it unpacks is your competition, because your competition isn't defined by you but by your customer and what he is willing to and wanting to purchase. It may also unpack the degree to which you apply empathy to your customer relationships. I'll have to give this last one some more thought.
Who is your customer? is a good question. Use it.