There was a time when sneakers were just sneakers: cheap, all-purpose canvas shoes. The only big decision a buyer had to make was whether to go for high tops or low tops. Then manufacturers such as Adidas, New Balance, Nike, Puma, and Reebok started making shoes mainly for running, and followed them with whole ranges of single-purpose sneakers: sneakers for basketball, for tennis, and so on. The trend caught on with consumers, who began buying different pairs for different occasions.

Nike raced ahead of the pack by exploiting its brand power to move from athletics footwear into athletics clothing, turning itself into a symbol of fitness and well-being. It then went several steps further, positioning itself as an athletic lifestyle company which, by using celebrities such as the basketball star Michael Jordan and the golfer Tiger Woods to endorse its goods, enabled customers to identify with the lives of their sporting heroes. Today, the company offers innovative and stylish products, backed by marketing that combines traditional advertising with imaginative schemes to build basketball courts in inner cities and donate free Nike gear to high schools.

At the same time, Nike has leveraged its brand by means of investments in...