How to figure out chords used in a song?
All kinds of ways to eat this elephant. Here is one: Some theory of what you can assume will happen, and then listening to the song seeing if what you assumed happened. Then there will be other ways - you have asked a rather large open ended question.
We are told the song is in a specific key, or we listen for the tonal center and assume that will be the key ....... or we look on the sheet music and see what the key signature is, at any rate our job becomes easier if we narrow down our search into one key.
Song is in the key of C. That's a major scale. So the 3 major chords in a key will be the structure chords, the three minor chords will be your color or flavor chords and the diminished chord will be used to move the verse to another area, i.e. like the beginning of a turn-a-round. for example vii-iii-vi-ii-V7-I .
The three major chords in the key of C are the C, F & G chord or the I-IV-V chords. A G7 will probably be used as the b7 add tension and lets the G chord act as the climax chord when you make it a G7. So..... your progression will probably follow the I IV V7 format and in a four line verse look something like this.
Start with the I chord then near the end of the first line the IV chord will become active and stay active going into the 2nd line then near the end of the second line the V7 chord will be introduced. As this is the climax chord it begs to resolve to the I chord and most times the second line of the verse will end with the I chord. The 3rd and 4th line will follow this same progression. Are there other progressions used. Of course.
Chord notes. The C is made of the C, E & G notes.
The F is made of the F, A & C notes and the G7 is made of the G, B, D & F notes. Take the scale and stack every other note and that will give you the notes of any chord.
Melody notes. Any note in the scale can be used. Now for the fun part. Your melody line and your chord line need to share like notes for harmony to happen. When you have harmony the two lines will sound good with each other.
So if the melody revolves around the C, E & G notes a C chord would harmonize that part of the melody fine. Then when the melody moves off and starts using some of the F & A notes your C chord is no longer harmonizing this new melody so you have to insert a new chord. The F would be a good candidate. So it's a balancing act between moving the verse along from I rest, to IV tension, to V7 climax, and then resolution to the I tonic chord AND sharing like notes so harmony can happen. Melody notes need pauses, a string of notes becomes noise very quickly. Our ears like four note phrases. Three close notes then a leap of at least a 3rd works good. After the leap a pause is called for and the fun happens with where you go for the next four note phrase. If you were writing your melody line using standard notation your treble clef line should have a wave action. Twenty foot breakers - little too much, two foot swells, perhaps a little more than that. It's the leaps that give you the wave action.
That's why people tell you to follow the chords and use the pentatonic scale notes in your melody. A pentatonic scale will give you three chord tones and this takes care of the harmony and then you have two safe passing notes to use for flavor, color or to add interest. Certanly you do not run the melody line in pentatonic scale order, use the pentatonic notes to come up with a melodic phrase. I mention the four note phrase as this should help you with the chord that is being used under that phrase.
Long story to say -- to identify the chords used in a song look to the melody notes. Your chords will be made from the active melody notes.
Is there more, sure. That is assuming what can happen, then you can listen and write down what is actually happening. It ends up being a combination of assumptions and listening to see if you assumed correct.
This should help. http://www.youtube.com/watch?v=vrDh0OFDCAk