If this is being used only on a portion of the home I would forgo using it and run siding to the ground. Using stone (or the like) should be ALL the way around the house. And vinyl would definitely by a hard no from me because it is vinyl.

I'd add 1" of XPS foam board insulation, a self stick mesh and"Tuff-II" elastomeric coating that can be troweled on. It's reasonably durable and looks like parged foundation material.