What Differentiates The Act Of Simply Grouping People From The Act Of Stereotyping?

The word stereotype refers to a simplified and  standardized image held by a group of people. It is based on some kind of knowledge that is usually incorrect. There is basically no difference between grouping people and stereotyping them But Stereotyping usually is based on a specific belief. Whereas grouping can have many different real or virtual reasons.

If you say perhaps separate everyone with long hair or short hair into groups, that would not be stereotyping. But if you say differentiated between hippies, and yuppies you are making a judgement of values based on appearance.