To edit a drop down list in Zoho CRM go to

1. Setup

2.  Modules and Fields under customization

3.  Select the module you want to edit

4.  Select the layout your field exists on

5.  Select the ellipse next to your field name.  (also known as a kebob) 

6.  Select edit properties and modify the list values.

If you would like to see a video, here is a quick video on how to edit a drop down list in Zoho CRM.  

https://www.youtube.com/watch?v=gazy8QdI1_k