Departmentalization of Organization by Customer Group

Customer departmentalization is where the organizations activities are ready to respond to and interact with specific customers or customer groups.

This organizational form is used when great emphasis is placed on effectively serving different customer types.

For instance, full-time day students and part-time night students of graduate business programs in universities usually are different in demographic profile and personal needs.

Wholesale and retail public are very different in many industries, as are government and private sector customers.

For instance,

banks may be departmentalized according to the markets illustrated in the following image;

Advantages of customer departmentalization

  • Encourages concentration on customer needs.
  • Gives customers feeling that they have understanding supplier (banker).
  • Develops expertness in customer area.
  • Saves customers’ time.

Disadvantages of customer departmentalization

  • May be difficult to co-ordinate operations between competing customer demands
  • Requires managers and staff expert in customers’ problems
  • Customer groups may not always be clearly defined (for example, large corporate firms vs. Other corporate businesses)
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