What aspect renders customer grouping suitable only for larger businesses?

Customer grouping, or market segmentation, becomes particularly suitable for larger businesses due to the need for diverse customer types of sufficient size. Larger businesses often have the resources and market reach necessary to identify and target multiple customer segments effectively. Having a diverse customer base allows these companies to tailor their marketing strategies, product offerings, and customer service approaches to address the varying needs and preferences of different customer groups.

This ability to segment customers effectively can lead to increased customer satisfaction, loyalty, and overall profitability. Smaller businesses may lack the resource capacity to identify and effectively serve diverse customer types, making such specialization less viable for them. In contrast, larger organizations can capitalize on the scale and data analytics to make informed decisions about how best to group and serve their customers, which enhances their capability to compete in broader markets.