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Focus groups are brought together to test a concept and see how it plays with various demographics. Focus groups are used by people developing advertising campaigns to make sure their message, whether print ad or television commercial, says what they want it to say. They are also increasingly used by politicians to hone their own advertising, either to get elected or to sell their policies to their constituents.
Focus groups are the work of market researchers. People are recruited to serve on a focus group and are typically paid a small fee for their time. They fill out questionnaires that rigorously identify their demographic group. Age, lifestyle, income, attitudes, political leanings and so on are all used to categorize focus group members into a particular segment of society.
The focus groups are shown an ad or a commercial and are questioned on their reaction to it. Does it appeal to their demographic, or does it 'skew older'? Market researchers have specific ideas of what demographic their particular product will appeal to the most, and it is very important that their ads appeal to that demographic the most as well, if they want to maximize sales. A particular ad might appeal to a teen demographic, for instance, but if the product is a luxury car, very few teens are going to be in the position to purchase one, and teens rarely have input into their parents' car-buying decisions.
One interesting recent example of the use of focus groups was in the attempt to sell the US public on a massive reform of the Social Security system. Those speaking in favor of the reform started by talking about privatization and private retirement accounts; the intent was to make the listener feel ownership in his or her personal retirement fund. But researchers discovered that the words 'privatization' and 'private' didn't 'test well' - that is, focus groups responded negatively to them. So they dropped the word 'privatization' altogether and started talking about 'personal retirement accounts', since this phrase tested much more positively.
Of course, tinkering with one's message by using focus groups can only go so far; the product you are selling has to live up to the advertising, or the best message-management in the world can't sell it for you.