A market study is necessary to analyze your competitors and to understand where are the gaps, problems needed to be solved by a new product. In a wide definition, you could also hear it as benchmarking or competitors research (with some differences but the global idea is the same).
You can choose to analyze many different aspects such as the products themselves, the way they are sold, the production methods, costs and profits. To do so you may need to see the products, test them, analyze how they are manufactured and conduct some deeper research about close competitors (the ones selling the same kind of products) but you shouldn't limit yourself to them. Checking on more distant products/services, substitutes can actually open a whole new world of solutions.
One way to compare products is to use cross-diagrams. Decide on 2 criteria you want to evaluate and put them on 2 crossing axis (Check example picture). Then you can place the products depending on how they relate to these criteria. You can then discover empty areas: the ones where no one wants to go and the ones where there is a good opportunity. On the example picture, the goal was to analyze seed spreaders. 3 persons were asked to place the different products regarding trustworthiness and intuitivity. These criteria being quite subjective, it was good not limit the results to one person's opinion. Going deeper in the market study would have been to not limit the work to seed spreaders and go wider by looking at other products made to spread whatever material.
You could also do function analysis for products, conduct customer journey, create system map when dealing with services and way more. This method page is a really short overview of market study, this is a whole topic by itself within marketing. I am sharing here only methods targeting designers.