Displaying Taxonomy on the menu Friends -

Please help with this... to some of you, this is really easy. But, I have been struggling with this issue since two weeks:  I need to create categories structures such as Creating Categories/Subcategories/Subsubcategories/Products and have it appear on the menu of a newly install drupal commerce. this is what I have done so far:


I created the taxonomies necessary
I created the categories and subcategories: i.e.: Products Categories\Air Conditioners\
I created the product "Samsung Air Conditioner Unit" and inserted it into the correct categories
I clicked on All Products and observed that Samsung Air Conditioner is properly inserted into the correct subcategories
However, when I clicked on the root category "Product Category" on the main menu, which is generated by Taxonomy, I do not see the product listed.


I just need to know how to configure the content type to allow the product to display in the correct category\subcategory group.
The reason the Samsung Air Conditioner Unit was not showing as we clicked on the category was because we inserted as  Product Categories\Air Conditioner\Air Conditioning Unit instead of Product Categories\Air Conditioning Unit.

The subcategory Air Conditioner was not defined.  So, drupal did not know how to display it.  Once we moved to Product Catogoies\Air Conditioning Unit, it displayed.  

Now, the task is how to create the subcategory Air Conditioners so that we could insert Air Conditioner Unit there instead of inserting it directly under Product Categories.