It was less about actually knowing the product (in fact, they said we could make up features) and more about how you interacted with the customer. Eye contact, friendliness, making sure the customer's needs are met.
I answered the question well, but the manager did not seem pleased. At first I thought it may have been some tactic but later realized that the interviewer was a total dummy. I was offered the job, but declined because the manager did not give me a good feel for the company. I got the impression that any dumbo off the street can become a manager there and I refuse to be associated with such a workplace.
Be truthful. They know when you're lying or making something up. If you haven't had any experience, answer the question with "I haven't had any previous experience with that, but (insert a time you helped ANYONE out with something big)"