Final answer:
The tool manufacturer demonstrated Product differentiation by creating lightweight hammers and saws for home use that were not offered by competitors. This differentiation, along with the Technological innovation to develop such products, gave the company a competitive advantage in the market.
Step-by-step explanation:
The tool manufacturer's success in leading the industry by producing lightweight hammers and saws that were suitable for home use, when no other competitor produced such items, demonstrates Product differentiation. This strategy involves making a company's product unique through various aspects such as physical attributes, location of sale, intangible features, and perceptions. By creating a differentiated product, the company could stand out in the market and attract customers looking for tools that are easier to handle for personal use, which corresponds to the firm trying to make its products different from its competitors as mentioned in the subject material.
Furthermore, the creation of this new type of product involves Technological innovation. The manufacturer used technology to develop a kind of product that had not been available before from competitors. Through market competition and the incentive to innovate, they could produce a product that consumers wanted, giving them a competitive edge and the potential for above-normal profits until competitors could catch up.