What Does it Mean to Reward and/or Penalize?
Rewards are not what YOU consider a reward, but what your dog considers a reward. For example: If your dog runs out the front door, he is being REWARDED with freedom. When you call him, he comes and you put him back in the house he is being PENALIZED by being put back in the house.

A reward can be verbal praise, petting, food, a ball or whatever motivates your dog. YOU know your dog -- you know if he would sell his soul for food or for a tennis ball. Make his reward what he likes and the time spent finding out what really turns him on will be well worth the effort.

Penalize does not mean punish. Punishment makes people think of hitting your dog -- which is extremely rarely necessary. The only reason to hit a dog is for anti-social behavior and even then it should be used as a last resort. ( "Anti-social" is not only biting, it is anything that can lead to biting.) A penalty can be anything your dog does not like. It may be a leash jerk, not moving when he's a on leash, or just ignoring him.