Interview questions can be tricky little things. And a great one to ask by hiring managers is this one: "How did you prepare for this interview?" You see, all interview questions have just three answers and this one is focused on the second answer: how motivated are you to do the work?
When looking to see if you are motivated to do the work for the company, hiring managers can't ask what your motivation is; you could say anything. There is nothing that shows the hiring manager, with demonstrable actions, that you are motivated to work at the company or in that particular job.
By asking how you prepared for the job interview, the hiring manager elicits the direct actions you took to prepare for the interview. By you going down a list, "I reviewed the company website, I looked at your competitors websites, I looked through the executive profiles..." you are giving the hiring manager proof that you prepared by researching his or her company.
Better than saying, "Oh, I practiced answering interview questions," don't you think? But you did practice your answers to interview questions too, right?
By listing off all of the different types of research you did (I'd leave out the part where you researched the hiring manager...), there is this assumption that you are more motivated to do the work. By spending two hours going through a company website and taking notes, it somehow translates into motivated to do the work for the company.
Of course, you need to research the company and the hiring manager. Not because you are necessarily motivated to work at the company (Oh, Google, I adore you so...can I please work for your fabulous company? Please, please, please??). Rather, you need to do the research to see if the company matches up with your job search goals. Whether you can settle on the company culture and determine if it matches up with the best ways you have of doing your work. Whether the manager's management style will help you soar or grind you down to the point of hating your job.
That's why you need to do the research: for your stuff, not the motivation to do the work for the company.
But doing all that research is a good way of answering this interview question. Just not for the reasons the hiring manager thinks of the answer.