What is customer grouping?

• A. Grouping an organisation into divisions that each deal with a different type of customer
• B. Grouping by geographic region
• C. Grouping by product line
• D. Grouping by supplier stage

Answer: (A)

Customer grouping means structuring the organisation so that different divisions focus on distinct types of customers, treating their needs, preferences, and buying behaviours as the main driver of how the business is organized. This setup lets the company tailor offerings, service levels, and relationships to each customer group, improving satisfaction and performance. The option described—dividing the organisation into divisions that each deal with a different type of customer—best captures this idea. Grouping by geographic region focuses on location, grouping by product line focuses on the products themselves, and grouping by supplier stage focuses on the supply chain, none of which center on the customer type as the organizing principle.