The Reds manager told BT Sport: "We were punished for a mistake and that is what cost us the game. We passed the ball well.
"The options in front of the ball were good but we probably lacked that little bit in the final third of the field. We did not create as much as we would have liked.
"It is not about Mario Balotelli, it is about the team. We lost the game today. We collectively lost as a team and we are disappointed at that."
The defeat, which is their fourth in the Premier League this season, leaves Liverpool seventh in the table.