Managing product categories
Tab Categories in Administration -> Products allows you to add, modify or delete categories for products.
When you click on each category, you can modify its settings:
In order to add a new category, click on New category.
You can also create a subcategory - just provide a parent category during creation. This creates a hierarchy within categories. Even a subcategory can have its own subcategory, so you can nest the categories really deep if you wish to.
How to use categories?
When you add a new product, you can assign a category to it.
It can be later used for filtering and creating queries on the Products page (more on this topic can be found "here:https://www.redmineup.com/pages/help/products/queries-filters").
Also in Orders you can filter elements by product's category:
Another way of using categories can be the grouping of products. You can find it under Options on the Products page. Choose products from Group results by dropdown and click Apply. Results of this will look similar to the below: