When developing your brand, one of the first things you should do is ask yourself a few questions: What do I sell? Who is my audience? Where do I sell my products? How do I want my business to be perceived? The answers to these questions will help you develop your brand.
Once you answered these questions, asked yourself some more and looked at other brands in your business, develop your style guide. Your style guide will be made up of the colors and images you want to identify your business and the fonts you will use in all your materials. Find a look and feel for your business that speaks to what you sell. Colors and fonts, and images can say a lot about your business. Pastels might create a more subdued feeling, whereas bright colors, depending on how they are used, might scream out "sensational." Monotype Corsiva might represent classy while Helvetica - ancient.
Once you determine how you visually want to represent your business, design a logo that will become the symbol of your business. In designing a logo there are several things to take into consideration. Often, less is more. Most brand logos are simple - two colors at most. Logos don't always have to include a graphic, although you may want to consider using a simple image that can be pulled apart from the name and used on its own to represent your business. When you see the Nike swoosh you immediately know the brand without seeing the name and vice versa. Create a logo that you can pick apart in a similar way.
Once you have your logo and your style guide, start thinking of other things that will distinguish you. Think about your packaging - the boxes, ribbons, bags, envelopes that you are going to use. Make sure that you put your logo - image, full logo, or a predetermined shorter version of it - on your packaging. You don't have to have items pre-printed. You can buy stickers (or stamps) and methodically place them on your packaging.
Promotional items are always a great way to get your brand out there. Think of what items would work best for your business - magnets, buttons, pens, notepads, mousepads, etc. There are so many things that can be used as promos. They don't have to be expensive but they should somehow represent your business.
Just remember, branding is a very large part of marketing your products. Be consistent in all that you do. Determine what will be used for what and stick to it, for instance, your logo will go at the top of all correspondence (or the bottom right, left, ...), your packaging stickers will only have the image associated with your business, etc.
It may take awhile to develop your brand. Play around with a bunch of ideas. Get your friends opinions. Everyone is a consumer and responds to brands. See how they respond to yours. Look at your competitors' logo and color schemes. It may take you a few tries before you find what is right for your business. Don't get discouraged. If you determine your brand isn't working for you, develop something better but remember, let your customers know that you are changing your brand. You don't want your previous efforts to go to waste or have your customers confused.
There is a great thread in the Etsy forums on branding and packaging. Stop by it for some additional tips and tools.