Defining Customer and Vendor Groups 
Procedure
It may be useful to classify your business partners according to groups, for example, according to the sector or size of your customer. Vendors can be grouped according to their business areas or the business transactions achieved with them.
You can assign a business partner to only one group. You can use the groups to:
Format reports and evaluations
Sort data and make selections, such as evaluating your sales figures for each sector
You assign a group when you process the master data of a business partner.
If one field in the master record is not sufficient to map the properties you require, you can also use the properties of the business partners (see Defining Business Partner Properties) and the user fields, which can be defined individually.
From the SAP Business One Main Menu, choose
Administration 
Setup Business Partners Customer Groups (or Vendor Groups) 
.The cursor appears in the first empty row in the window.
Enter a descriptive name for the group and choose Update.
To change the name of a group, overwrite the current entry and choose Update.
After making all your entries, choose OK.
When you process a master record, you select the group from a dropdown list. Therefore, it is convenient to have the groups you use most frequently at the beginning of the list. Unless you specify a particular group, the master record is assigned automatically to the first entry in the list.
To remove a business partner group, select the relevant row and from the menu bar choose Data Remove Update.