My induction cooker has two circles marked on it, a small one and a big one. It came with a set of small and big pots that match the size of the circles. After a year, all the pots have a small circle burned into them. Does that imply that the the outer circle on the cooker is not working? Or could it be because the pots have warped - the centers all bow up a little now (about 2mm).
Warping doesn't matter with induction, since you don't need the pan to touch the surface, unlike resistive electric technology.
I suspect that your unit is working as intended. I have personally never seen home units with a large coil, they typically have a 12 cm coil or less, and since most pans are larger, they only create direct heat in the middle of the pan. You can use larger pans on it because there is thermal conduction happening both within the pan metal and within the food in the pan. My guess is that the outer circle is an indication of what is the maximum suggested size of pan, presumably because the conduction will not be sufficient to produce good results. I have not seen units with an inner circle painted on, but it could be a guideline for the minimum size of pan that the unit accepts. This is very likely if the size of the inner circle is the same as the size of the coil (your burn mark).
And by the way, your burn mark and your warping both mean that you are using extremely high heat to cook. There are almost no foods which benefit from that. You may consider reducing to medium-high for most cooking - when I had induction, that typically meant using the first or second wattage setting on my unit (cooking for 1 person).
There are some factors to consider
Usually cheaper ICs have a smaller coil size (4 instead of 6 inches), and the induction pulsing (power control) is not working optimally.
The IC cookware size detection might also be defective (if the unit has one), or the pan doesn't trigger the "bigger size" threshold.
The pan base material (and depth) play an important role, if not the most important. The pan base has to be from a ferrous metal for the induction to work. The base can be composed of several layers, the lower one is heated from induction, the upper one spreads the heat more uniformly (if it isn't too thin).
For instance, cast-iron is known to spread the heat more uniformly thanks to its thermal inertia.
See also this Wikipedia article.
