You're going to want to use the Mail Merge - Labels feature, telling Word to
use a Contacts list from Outlook. However, category isn't one of the fields
that Word gets from Outlook when you use contacts.

So, before launching the mail merge in Word, set up a new Contacts folder,
into which you put the category of interest. If you have multiple categories
you want to use, but somehow distinguish, you'd need to create a separate
contact folder for each.

Once created, right-click each Contact folder, and choose Properties. In the
Outlook Address Book tab, click to enable "Show this folder as an email
address Book".

Once done, the category contact folders you set up will be selectable in
Word.

Alternatively... you could use one of the field that Word *does* take from
Outlook to store Category. I suspect, however, that doing this would be
rather tedious (unless you're skilled at VBA).

See the "Mailmerge from Outlook" item on fellow MVP Graham Mayor's website
at:

http://www.gmayor.com/mailmerge_from_outlook.htm

and "Mailmerge Labels with Word XP" on fellow MVP Graham Mayor's website at

http://www.gmayor.com/mail_merge_labels_with_word_xp.htm