Step 1:

Enter the items you want in the drop-down list anywhere in your workbook, one per cell. Select the entire list and assign it a name in the Name Box.

Step 2:

Click the cell where you want the list to appear and press "Data Validation" in the Data Tools section of the "Data" tab.

Step 3:

Choose "List" in the Allow box and make sure "In-cell Dropdown" is checked. Type the name you assigned your list, preceded by an equals sign, into the Source box.

Step 4:

Enter a message on the "Input Message" tab to display a notification whenever someone clicks the cell. This message can contain any text, such as to present the list of options to users who immediately start typing in the cell rather than checking the drop-down list.

Step 5:

Pick an error style on the "Error Alert" tab and write a message to display if a user enters an invalid choice. The "Stop" style prevents users from entering options not on the list, whereas the "Warning" and "Information" styles allow the user to override the error.

Step 6:

Click "OK" to create the list. Select the list's cell and open the drop-down menu to pick from the available options.