Dortmund slumped to a 3-0 defeat against struggling Hamburg on Saturday, a result that ended a run of three consecutive league victories.
The loss means Dortmund trails reigning Bundesliga champions Bayern Munich by 20 points and, while Klopp admits his team is too far off the pace, he is determined to maintain a challenge in the DFB-Pokal and Champions League, with his side currently preparing for Tuesday's encounter with Zenit St Petersburg.
"Some clubs are under pressure to make the final [of the Champions League] every year, but at other clubs everything has to come together just to get there in the first place," he told Fifa.com. "We're somewhere in between. My priority for 2014 is to have my team complete the second half of the season in better physical shape. We've been hardly recognizable due to all our injuries."
The injuries and other wobbles have made it tough for Klopp's club to keep pace with champions Bayern Munich.
"We needn't bother talking about the championship. Bayern Munich are the best team in the world at the moment, and unfortunately they play in the Bundesliga, so we're up against them all the time," Klopp said "We don't have a chance in the league any more. But why would we write off our chances in the other two competitions before we've been knocked out?
"We're strong when we have everyone fit, and even when we don't have everyone fit we still have the desire. We've proved that and that's why we're in a relatively good position. We want to make the most of it."