Allardyce said: "We do need a stronger and younger squad. All my focus will be geared to bringing in the players we need to improve our standing.
"This season has shown that we need more quality. An extra 2-3% could have been the difference in getting back into Europe or reaching a major cup final."
Allardyce is planning a major re-shuffle of his squad and added: "We need to strengthen in all departments.
"The whole focus is to bring in younger players, who have the experience in playing top-flight football and are willing to adapt to the English game quickly."
Meanwhile, West Brom are reportedly ready to make a move for Bolton defender Bruno N'Gotty, who is a free agent this summer.
The former French international, 34, has been released by Wanderers and is looking for a new club.
Albion manager Bryan Robson could face two stumbling blocks in bringing N'Gotty to the Hawthorns, persuading the player to drop into the Championship and meeting his financial demands.