Setting up Category
Category allow visitor to browse your site with proper navigation. And it is important to separate your product in a way that your visitor know how to find it on your website. Go ahead and set this up!
You are setting this up
Setting up Subcategory
In case category is not enough for categorizing your product range, you can sub-divide your cateogry into subcategory for further defining your specific product group. Let see how you can setup subcategory.