How to use Mencoder to encode videos

With personal media players (PMP) getting really affordable, consumers are converting their video collection to formats that are supported by their favorite PMP. In my case, I use an iPhone so I convert movies to H.264 or MP4 formats.
There are several tools available to convert videos to other formats and mencoder is just one of them. Personally, I use ffmpeg, also from the same family as mencoder but with a graphical front-end. Anyway, to those who want to convert videos using the CLI, here's a useful Linux.com tip for you.