The Reds have suffered a dismal start to the season, lying 16th in the Premier League with only five points from as many games and suffering the humiliation of being bundled out of the Carling Cup by League Two Northampton Town on Wednesday.
And Gerrard says the 18-time champions have to adopt a more pragmatic approach for the season ahead.
“A realistic target is to try to get back in the top four. Winning the title, of course, is a possibility because there's a chance it can happen.
“But realistically, our focus is to finish in the top four.
“If we finish first, second or third, fantastic, great, and we certainly won't give up on that, we'll fight all the way to the end.
“But at the start of the season, you have targets and from a realistic point of view, after finishing seventh last season, our target was always to get back in the top four.”
Despite Liverpool's wretched start, Gerrard sounded a rallying cry and insisted there could be “no sulking” after the shootout loss to Northampton - one of the biggest upsets in the club's history.
“Football isn't just about highs and those who were involved against Northampton will learn from the experience.
“You look at what went wrong and try to learn from your mistakes.”
The captain will return against Sunderland on Saturday after being rested on Wednesday.
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