How does it work:
In the example below, by selecting the parent category called 'Group 1' , all the sub categories 'Finance,Other,Supplier' are selected automatically.
Or we can only select the sub category (Like the category 'Marketing' In the example below)
Search for contact by category
How to group categories:
Go to Admin and open the 'pick list manger' and select the table called 'Contact Category', this table holds the list of categories.
Create new category like 'Group 1', this category will be the parent group.
Find the child category and set the parent category ('Group 1' in the example )