Keep in mind the following principles: Cyclization is favored when a five/six-member ring may be formed. Addition at an aldehyde is favored relative to the same reaction at a ketone.

As a result, abstraction of a hydrogen bound to carbon 6 (an alpha-carbon) is favored since the resulting carbanion may attack the aldehyde (carbon 1) to form a six-member ring, resulting in compound II. Compound I results from abstracting a hydrogen from carbon 2, generating a carbanion which may then attack the ketone. Based on the latter of the above principles, this is a minor product.

First step: Friedel-Crafts acylation of benzene

Second step: Formation of enolate

Third step: aldol addition (enolate attacks carbonyl carbon in benzaldehyde)

Fourth step: neutralization of anion and dehydration forming alkene