The result sees the Foxes drop into the Europa Conference League.
"They've missed so many opportunities in this group - 2-0 up at home to Napoli, the Vardy penalty miss at home in the draw with Spartak, 2-2," said Savage.
"We always praise Leicester and they've done remarkably well. But to come third in that group with the opportunities and now go into the Europa Conference League isn't good enough."
The former Leicester midfielder also criticised the team's performance against Napoli, where they clawed their way back from two goals down only to concede a third goal early in the second half when Elif Elmas scored his second of the night.
Savage added: "Leicester without the ball, defensively weren't good enough tonight. Are Leicester a European team? They've proved that for the last two seasons.
"They've got the manager, but the manager needs his best players on the pitch at all times. Their budget is probably mid-table – so they're overachieving - but to go out from that group tonight is not good enough, I think."