An attribute is simply a characteristic of a product. Size, color, and price are all examples of attributes. They are characteristics that can vary within a product. For example, a shirt can come in 5 sizes – XS, S, M, L, XL. Size is an attribute.
Before you can add products to Magento, you need to make sure the Attribute Set has all the options entered that you will need. For example, if your Attribute Set is Size, you need to make sure that all sizes that are offered are entered.
On the dashboard, go to Catalog → Attributes → Manage Attributes
Find the attribute you want to modify and double click it to open
Click on Manage Label/Options. To add an option, click the Add Option button.
Enter the name and position (this is where you want it to show up in your dropdown menu)
Click Save Attribute