Updateable drop-down menu for an item database?

Hello, I have a database of items that I am keeping track of. Each item falls
into a certain catagory (e.g. office, toy, household, cleaning, etc....)

I'd like to have a certain column be dedicated to providing the drop down
catagory list. So as an example, cell C1 and C2 would be the column header,
C3 -> infinity would automatically contain the drop down menu.

This menu also needs to be updateable so I can add additional catagories
later in the future. How do I do this?