The first and most important part of your on-page SEO is the title tag (<title></title>). Many people who outsource or create a site in a WYSIWYG editor completely forget about the last of the meta tags that still gives some quality ranking love from search engines.

The benefits of using optimized title tags are three fold:

A user searching for your keyword will see your site's link highlighted in the search engines if your page's title is the same as the phrase they searched for. This drastically increases click through and can even give you more traffic than those who rank above you if their title tags are not optimized.
Increase your rankings on the search engines.
Help the engines distinguish between pages that might look similar.

Higher Clickthrough Rates

Search engine optimization isn't just about showing up number one on search engines. Rather, it's about getting the all the traffic that you deserve from the search engines. If you rank #6 for "free hats" and you and your competitors forget to include that in the page's title tag, chances are, the person doing the search won't see much difference between your site and the others.
However, if you were to change your website's title text to target your most important keyword phrase "free hats", then when someone completes the search for "free hats", they'd see your site show up in bold. This technique will greatly increase the user's desire to view your site first, as your site looks much more relevant and targeted.

Better Rankings

All too often, people believe that the title tag is a place to list the business and domain name of the website. This is wrong and is wasting one of the easiest ways you can tell the search engines what the a page is about and how they should categorize it. While humans might not notice the title tag, search engines certainly do.
Use this opportunity to choose the most important keyword that you want to go after and get the free ranking boost that so many websites are missing out on. If you still want to include your domain or name of the company, do it after your keyword, followed by a dash (e.g. "free hats - hatsemporium.com") to show that your keyword is the most important.

Help the Engines Distinguish your Pages

It's not easy being a search engine. They crawl the web day and night, taking the information from the web and trying to categorize it in a useful manner so that users can find what they're looking for. Make their job easier. Post clearly what the topic of each page is, using title tags, and help the search engine to distinguish one page from another.
You may have two pages that are quite similar and it may require a little thought to point out how they different. Don't make the search engines figure out for themselves because they might make a mistake. Instead, make the decision for them. Spell the differences out for them and help your rankings in the process. This is just one strategy in avoiding the duplicate content penalty, which we'll be getting into greater depth later.