As your database grows bigger, it is important that you can segment it. Do this by grouping your contacts.
Groups are used to build a donor profile. Examples of this would be location, interests and donor type. This can vary from organization to organization.
The system will present these key indicators to you in a profile tab. These can be by a single select option, such as location. A multiple select option would be interests. It could just be checkbox such as Board Member. The profile tab is configured in your setup but you can create ad-hoc groups as well.
Groups can arranged by category, within the system, to keep it tidy. You can target a bulk email to a specific group of people. You can run reports against different group criteria.
This will give you more insight into how groups work.