Keep in mind that:

The algorithm optimizes the sales based on previous conversions. The learning curve reaches its maximum confidence around 10 daily orders for a strategy.

You should split your catalog into strategies by following these principles in the order:

Just like a ladder, you need to stand one a rung to catch the next rung. Each strategy needs to comply with a step before moving to the next step (splitting more).

Of course, you can skip a rung/jump a step but you should not catch a lower rung afterwards.

For example, you can split your catalogue into strategies that have a minimum of 2 daily orders AND THEN split by category. But you should not split by margin afterwards.

If you want to split by margin, you need to forget the split by category you made previously and start again from the 2 daily orders.

The perfect strategy has a minimum of 10 daily orders AND its ASINs are margin-alike AND the ASINs are category-alike! It is the last rung.

You should group ASINs based on their daily orders. A strategy should have at least 2 daily orders! You can group the ASINs with low daily orders together in a force product visibility strategy.

You can split your strategies into smaller strategies as long as no strategy would have had less than 6 daily orders. You can create 1 product group for analysis before creating any strategy. Afterwards, you can filter the product group in SALES & ADVERTISING to make sure it has at least 6 daily orders.

The goal is to have your strategies in the last stage of the learning curve (Optimizing) before splitting your strategy into smaller ones.

Once a strategy has more than 10 daily orders, you should split your strategies by margin. The most common case is to have 3 product groups used in 3 different strategies:

Before splitting, you can create product groups with the ASINs you want to put in another strategy. Then, you need to filter the product group in SALES & ADVERTISING to check the daily orders for both product groups:

If the existing strategy would still have had at least 2 daily orders without the ASINs in the new product group, you can keep it. Otherwise, you should pause it and create a force product visibility strategy instead.

You can create a sponsored product strategy for the new product group and apply the ACOS the product group used to have (cf: SALES & ADVERTISING)

As a rule of thumb, each product group should be used in one strategy. It could be used in more than one strategy ONLY IF you want to define different ACOS TARGET and/or MIN DAILY SPEND and/or TARGET DAILY BUDGET for different segments. It is explained in detail here.

A strategy can contain ASINs that are very different. Each bid is independent and the algorithm focus on the most relevant keywords and products only.

For example, you can group together teacup and computers in a strategy without consequences.

There is one exception: tactics. A tactic is a bunch of keywords and products (segment) you set up in a strategy to force the algorithm to bid on it. Tactics can contain anything (example: your brand name as phrase targeting OR a competitor's ASINs)

If you want to have control over the keywords and product the algorithm targets for you, you have 2 alternatives:

It is necessary to split by category for strategies that contain tactics with generic keywords or products