When to use Email Template and when to Use Mail Merge Template

Mail merge templates are used to send bulk email to multiple users at a same time.
Mail merge templates could be used in following scenarios
     1. Birthday mails.
     2. Appointment letters
     3. Multiple Resignation Letters
Email Templates could be used in following scenarios
     1. New case assigned to a user
     2. New admission application received
     3. Some record needs approval


Here is the table for feature of both templates

Feature	Email Template	Mail Merge Template
Insert merge fields	X	X
Insert custom attribute lookup fields		X
Are available to send in bulk	X	X
Preview before sending in bulk		X
Edit before sending in bulk		X
Place content in the body of an email	X	X
Respect do not contact rules	X	X
Create personal or organization-wide template	X	X
Can be used in workflow	X
Can be created globally for use across multiple entities	X
Can be created for custom entities		X
Requires the Outlook client to create template		X

I hope it helps someone. J