City led on the night thanks to a quick-fire goal from Gabriel Jesus but were pegged back a few moments later when Mohamed Elyounoussi fired home from close range for the visitors.
Raphael Wicky’s side found a second goal 20 minutes from time as Michel Lang rifled his tight-angled shot past Claudio Bravo.
Speaking to the media after the game, the City boss said: “Happy to be qualified for the quarter-finals for the second time in this club’s history, so we are new in this position.
“Of course, we are so happy for that - the qualification. Even with the first-half being quite good, the second-half we forgot to attack, we forgot to play and forgot to pass the ball. To pass, to pass for itself is nothing.
"The second-half was really, really poor.”
"When that happens, that is not football"
It was that second-half play that led to City’s defeat as they only created one additional shot on target following their two in the first-half.
Their progress was all but secured following a 4-0 win in the first-leg in Switzerland but when asked if his side's lack of experience at this side of the Champions League was a factor, Pep answered: “We tried, we spoke about that and I think what we showed in the first-half, we showed we know how to win the game and (almost) had the second goal with (Ilkay) Gundogan.”
“We created a lot of chances,” Guardiola continued. “We were good but after 1-1, the second-half, the best way to come back is to create the passes, the build-up to find and attack. It didn’t happen, we just passed for itself.
“When that happens, that is not football.”