Microsoft Excel

I created a long list with client names and addresses in Excel 2007, as below:
Title First
Name Sur-
name Address 1 Address 2 Address 3 Adress 4
Mr James White 6 Red Rd Whitehill London SW1 2DL

I am trying to do a mail merge for address labels, but it does not work. I cannot get the drop down list which starts with: Insert merge field: Title, etc.; I am trying to follow the steps mentioned below, I assume they are correct???
After Select Recipitants and Use existing List (at this point I search for my existing Excel customer list) instead I get Fields F1. If I click on Address fields, I get "Courtesey title", etc.

Again, I do not understand why the following steps outlined below do not work assuming they are correct:-

I went to Microsoft word 2007 to obtain a blank sheet
Mailings
Start mail merge: labels (I chose my labels, L7173)
Select recipitants
Use existing list (this is the list which I created in Excel)
Insert merge field: title (space)
Insert merge field: surname (carriage return)
Insert merge field: company name (carriage return)
Insert merge field: address 1
Insert merge field: address 2
Insert merge field: address 3
Insert merge field: address 4
Update labels
Preview results
Finish merge

Thank you for your help ! Best regards, Christa Rewcastle