If you're after something you can bake in a regular oven, then some kind of polymer clay is probably your best bet. There are air dry clays, but I've heard they're a bit hard to work with and you have to work fairly quickly? I've used Sculpey Premo which has worked pretty well for me and comes in a few colours; I've also heard a lot of pros use Super Sculpey for sculptures but haven't tried it yet.
So far I haven't really used any fancy tools other than the little plastic set that came with my clay
sweatdrop I've only done fairly simple sculpts so far though, so you might need to look into some fancier things as you need them.
There's an amazing tutorial for using a maquette for sculpting
here, and a more simple one
here if you're interested - they also talk about the kinds of tools they use and how to set up the armature.
Good luck!
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