ISO-8859-1 (aka Latin1) included only Latin based language characters. It is limited in size, and not compatible in multilingual environments. It has no apostrophe, nor single quotes, for instance – but it can still handle a lot of languages, from Kurdish to Swahili. It can’t handle Dutch, Estonian, Finnish, Hungarian and Welsh particularly well, nor can it show the Euro symbol. Users whose outbound e-mail contains English or other Western European languages should use this encoding. It is understood by virtually all receiving e-mail reader software.
Encoding UTF-8 supports almost all possible characters, including international characters. UTF-8 can represent any character in the Unicode standard. It is backwards compatible with ASCII. Users who need to send e-mail with non-Latin data (e.g., the Euro symbol, Hebrew, Chinese, Japanese, Russian, etc.) should use this encoding. It is the preferred and most used encoding. For instance, if you’re sending any entirely non-ASCII messages (Asian languages, primarily) then UTF-8 is your best bet.
Encodings Shift_JIS, EUC-JP and ISO-2022-JP are useful for users in Japan, but are not recommended for other users.
For additional information of which e-mail encoding that is setup on your local client please contact your IT department.
For configuring e-mail encoding within Salesforce, it can be configured on the Salesforce User record, or on Email Templates.
For Salesforce User record: Name | My Settings | Personal | Language & Timezone | Email Encoding
For Email Templates: Name | Setup | Adminstration | Communicaton Templates | Email Templates (select the template) | Encoding